Alan Young

What Healthcare Reform Could Mean for ETFs

If Lydon thinks the legislation would destroy some businesses, he should be clear about it. Does he mean, literally, "legislated out of existence" as in outlawed, forced to discorporate? I don't know of any such provisions in the bill. If he means, "no longer able to compete" he should say that.

This is another silly overreaction based on the ravings of right-wing talk show entertainers who know (or care) nothing about the legislation, or the health care business, and take talking points from insurance industry lobbyists: "pull the plug on grandma." It's just noise, and Lydon should know better than to turn it into an investment thesis.

The fact is, we collectively spend far more on healthcare than any other country, and we are not getting our money's worth. Bill or no bill, we cannot survive this trend—we just can't afford to keep feeding the greed of these companies (big insurance, big pharma, and big hospital networks). They will have to learn to get by on less. Unfortunately, the current legislation won't even accomplish that. The pigs are still at the trough. It's going to take an even bigger crisis to focus the political will to start making health care affordable *for our economy as a whole*. (Whether or not it will be affordable for individuals is another question.)


On Nov 10 04:36 PM Steve in Greensboro wrote:

> Thanks, Mr. Lydon, for the note. You wrote"...On the other hand,
> if healthcare reform goes through, some ETFs could see their holdings
> change as some constituents are legislated out of existence by the
> new laws..."
>
> Wow. "Holdings will change" is a pretty euphemistic formulation.
> Don't you really mean that "if healthcare reform goes through, shareholders
> or healthcare ETFs will see a substantial part of their net worth
> destroyed as the constituents are bankrupted"?
>
> Let's be clear
>
> If you think Obamacare is going to be enacted (or if you don't know),
> you should sell health care and every other U.S. equity and stay
> in cash.
>
> If you think it is going to be defeated and result in no bill, you
> should buy healthcare and every other U.S. equity.