Jan

22

Increased HealthCare Spending: Profit From It

January 22, 2006 |

Americans are constantly requiring more and more expensive medical care. Currently, we spend 16.2% of all of our spending in healthcare: this includes private, insured, and public funded healthcare. By year 2015 this number will climb to 20% of our economy according to a government study announced on USA Today.This is hitting us all right now in the form of taxes and medical insurance – even if your employer carries the majority of the load on this last one, it is dollars they are not giving you in salary.

How can we reduce the impact it carries on us? I suggest two things:

  • Reduce your own healthcare costs by carrying out preventive measures: maintain a healthy weight, don’t smoke, don’t consume harmful substances, and visit health care providers for preventive medicine before a condition becomes too costly to repair.
  • Invest in health care providers. As much as you can take care of your own health, you can’t force other people to take care of theirs. I estimate that Americans will continue to practice unhealthy lifestyles that will require them to increase their healthcare expenses. Profit from our shared misery! Even if the government ends up charging you with ever increasing taxation to pay for the healthcare, you can recoup some of it from the payments they will have to provide to the healthcare providers: which will hopefully be owned by you.

I used my trusty Yahoo Stock Screener to help me find stocks that may be of interest. I clicked in the following conditions:

  • Sector == Healthcare
  • Earnings Growth Past 5 Years >= 7%
  • Earnings Growth Estimate This Year >= 7%
  • Earnings Growth Estimate Next Year >= 7%
  • Price to Earnings Ration (P/E) <=20

And I came up with:

  • WellPoint Inc. (WLP)
  • Aetna Inc. (AET)
  • Quest Diagnostic (DGX)
  • Coventry Health Care (CVH)
  • Health Management Association (HMA)

Out of these five, I feel inclined for WellPoint (WLP) and Aetna (AET). Well known companies, fairly well regarded by the analysts, and are the largest and best entrenched of the five.

This is a way to avoid becoming a victim.


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