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Obamacare: The New Pulse of Healthcare

4 March 2013 in Trading Ideas

Last week, New Jersey’s Chris Christie became the eighth Republican governor to sign on for the Medicaid expansion that is the centerpiece of the Affordable Care Act, popularly known as “Obamacare.”

“We have an opportunity to ensure that an even greater number of New Jerseyans who are at or near the poverty line will have access to critical health services,” Christie said.1

It was another sign that, despite the controversy, Obamacare and its sweeping changes are here to stay.

Obamacare’s impact on the healthcare sector is expected to be far-reaching. Though the industry will need to make major adjustments to comply with the new regulations, some companies stand to benefit. That’s the premise behind the new Obamacare motif, which includes companies in industries that could benefit from the coming healthcare reforms.

The motif provides exposure to five segments of the healthcare industry:

• Electronic medical records could see wider adoption in the efficient medical system envisioned under Obamacare. To make the transition from thick folders of doctors’ notes to a modern digital records system, hospitals will require imaging, transformation, and IT-related services – and both established companies and startups are competing for a share of this multi-billion-dollar market.2

• Generic drugs could see a boost if Obamacare paves the way for health plans to improve cost-efficiency by reducing coverage of brand-name medications in favor of low-cost generics.3

• Hospitals may be able to reduce their losses from unpaid medical bills, as an estimated 30 million people gain health insurance for the first time.

• Medicaid services could see a boost in business – approximately half of the 30 million newly insured are anticipated to fall under the Medicaid umbrella.

• Pharmacy benefit managers could see increased volume from the influx of newly insured patients. These firms handle the transactions between hospitals and retail pharmacies; as more people are prescribed drugs, these firms could see their business grow.


1http://abcnews.go.com/blogs/politics/2013/02/christie-joins-gop-governors-in-expanding-medicaid-under-obamacare/

2http://www.nytimes.com/2013/02/20/business/a-digital-shift-on-health-data-swells-profits.html?pagewanted=1&_r=0&hp

3http://www.forbes.com/sites/brucejapsen/2012/11/07/five-obamacare-winners-in-second-presidential-term/

Tags: Obamacare

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