Healthcare Answer for fmahnke
Health insurance is basically a profitable business model, although far too complicated for me to analyse individually. I have made choices based upon the recommendations of the TMF (UNH), Legg Mason, (AET) and Fairholme funds (WLP).
I am long the larger players in the sector because they have helped write healthcare reform policy. There is almost nothing bad for their business models in the proposals moving through Congress. The only prce controls being talked about expire before 2011 if they even get included.
Medicare for low income people might be expanded to include age 50 and above. This group (older and low income) is relatively expensive and shifting their burden onto taxpayers through medicare will not hurt insurers. Medicare is fast becoming a Federally subsidized for profit industry. Mandated and taxpayer subsidized insurance for more Americans will also help insurers because the insurers set the premiums to be profitable weather the new enrolees are young and healthy or not. The loss of premiums during the economic downturn is also a good thing for insurers because they have collected the premiums and are now free of the liability. As people get back insurance it will be at higher individual premiums or higher employer backed premiums.
On the expense side the difference between what insurers pay Doctors and what those Doctors would like to be paid is only growing. It is not collusion, it is just using the same programs.
They are the financial gatekeepers of 8% of GDP and growing.