Too Hard?

As previously noted, there are times when it’s almost too easy to write these posts; where the story pretty much writes itself, and all I need to do is provide a link and the requisite snarky comments about people who either agree or disagree with the point the original author made (depending on whether I agree with it or not). But I would be remiss if I didn’t also point out that there are some days – and some stories – when the reverse is true; when a story or set of stories is so obvious that it’s really hard not to just provide the link and write “Duh?” next to it repeatedly. Such was the case this morning when a whole set of news organs – many of them run by otherwise brilliant people – started posting stories about how health stocks were rising on the news that the Healthcare Reform bill had be passed by Congress…

Now, I’m not blaming the stock reporters; it’s their job to monitor the markets and tell us when a specific class of stocks rises or falls – or when a specific company does – unexpectedly. Without those services, we’d all have to spend the day watching the various tickers, which I regret to say is a bit less interesting than watching paint dry, at least for most of us. What moves me to write “Duh?” repeatedly is the surprised exclamations that this is happening, which appear to be popping up like June asparagus all over the Web today. As if there is anything surprising about 30,000,000 customers suddenly entering a market driving up the fortunes of the companies that will supply those customers – even if the companies themselves have been dubious about the whole thing…

People who love to revile the insurance industry will be dancing in the streets today, of course – and they probably should be. In many ways the Healthcare Reform act is a classic case of an industry refusing to regulate itself correctly until the government is forced to step in and do it for them, and I don’t argue that a lot of people will be getting their just desserts as a result. But by the same token, I don’t for one moment believe that the industry won’t find a way to make money on all of these new customers (even if they can’t reject them for pre-existing conditions or cancel them for getting sick anymore), and even a few hundred dollars per person per year adds up once you start talking about 30 million of them…

The primary thrust of the reform act isn’t to make healthcare services available for free, or even to include them in the services you get for paying your taxes; the idea is to make them available to everybody. It will take some innovative thinking to turn this condition into an opportunity – as opposed to just insuring healthy people and kicking out anybody who might actually NEED health insurance – but the majority of the people who will benefit from this new law are the ones who were already willing to pay for health insurance, and just couldn’t get it until now. Most of them will end up paying more to their insurers than they end up costing in services, and if the insurance companies change their focus to cover more preventative care and proactive measures (and they’ll almost have to, with this many more customers) there’s an excellent chance that they will make a significant profit on all of this new business…

So of course their stock is going to rise. And if they play their cards correctly, there’s every reason to believe that their profits will also go through the roof, even on lower individual margins per sale. And if that happens, I’d expect to see all of the major healthcare providers withdrawing their support from the opposition to this measure, and from all of the politicians who have been campaigning against it – which should make for some interesting posts for all of my counterparts who blog about politics instead of business. My only point here is, of course this is a good day for everyone publicly-traded company in the healthcare business…

Why wouldn’t it be?