Stock Market Winners Prove Bureaucracy Pays Under Obamacare

Friday, 04 Oct 2013 07:41 AM

By Michael Carr

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American healthcare has improved over the years because of innovation. New drugs, new medical devices and new procedures have prolonged life and improved the quality of life.

However, the Affordable Care Act has shifted the emphasis toward paperwork associated with healthcare rather than the benefits of healthcare.

This shift can be seen in the stock market performance of healthcare stocks. Since the law was passed, care manager stocks have doubled the performance of the market. Care managers include insurers like Humana and pharmacy benefit managers like Express Scripts.

These companies play a role in healthcare, but they should not be the leaders because their focus is on preventing innovation rather than developing new ways to save lives. Healthcare managers seeking to lower costs are preventing innovators from spending on research and development.

Obamacare-stocks.jpg
Medical device manufacturers have performed in line with the broad stock market. Drug companies have lagged the broad stock market.

Investors in the stock market buy the companies they believe have the brightest future. In the past, medical device manufacturers and drug companies offered investors the chance to win big if the company developed something new.

Since Obamacare became the law of the land, these companies have been viewed as price gougers that should have limited, if any, profit potential.

Obamacare shifts the focus of the healthcare system from improving the quality of life to increasing the bureaucracy required to see a healthcare provider and ensuring that the providers and manufacturers earn only a minimum return on their investment.

As long as bureaucracy trumps innovation in the stock market, we should expect to see a decline in the quality of healthcare and few innovations that will allow us to overcome medical challenges.

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