What Every Investor Needs to Know about the True Cost of Healthcare Reform
Don’t believe the $1 trillion hype. Healthcare reform, in its current form, is going to cost far more than the independent reports let on.
As investors looking for investment ideas for how to personally profit from it, there should be one easy way to stay protected without buying a single healthcare stock. Let me explain.
Healthcare reform has moved front and center. There are now four different bills in draft form being floated around Washington.
Many questions remain. Will there be a “public option?” Will Obamacare go the way of Hillarycare? Most importantly (and what we’re concerned with most) is the cost?
Initial estimates put the cost of healthcare reform at $1 trillion:
The CBO says a government-run health care system would cause 23 million Americans to lose private coverage, cost $1 trillion dollars and still leave 30 million uninsured.
The Congressional Budget Office, not your typical right-wing think tank, has looked at the Affordable Health Choices Act, as unveiled by Massachusetts Democratic Sen. Edward Kennedy, and found the word "affordable" to be false advertising.
We have looked at it and found the word "choices" to be as meaningless as being told you can buy any car you want — as long as it's a Ford.
The CBO director says on his official blog, "According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period."
This figure doesn't even include the cost of a proposed "public plan" option.
$1 trillion is a lot. It sounds like even more when we see there are no reasonable ways to pay for it. Frankly, the three cent tax on soda isn’t going to amount to much.
But that’s actually now looking like a conservative estimate. Other estimates, including this one from the HIS Network put the expected costs of healthcare reform at much higher levels:
Health Systems Innovations Network, a consulting group, went ahead and estimated the full cost of a bill that included the subsidies and Medicaid expansion, and reduced the number of uninsured by 99 percent.
With these assumptions, they estimated the cost at a staggering $4 trillion over 10 years, resulting in the shift of 79 million Americans to government-run health care. The report does not include possible tax increases or spending offsets, but notes that, "this would be a challenging proposal to finance with budget neutrality."
Bottom line: $4 trillion
That’s the total with the “public option” for a government funded insurance scheme. Worst of all, there will still be 20 million to 30 million uninsured folks.
If this bill, in virtually any shape, will have a minimum $1 trillion tab and then grow from there. Worst of all, like all new government programs, there are only three ways to pay for it:
1. Higher taxes
2. Spending cuts elsewhere
3. Printing more new dollars
The first two are politically unfeasible (even more so given the state of the economy). The third, is hidden from the public, doesn’t require any majority approval, and has been used time and time again.
L-shaped recession and stagflationary economy here we come. Take action now. The window to buy gold and undervalued gold stocks is open and part of your portfolio should be devoted to it.
