Eye On US Healthcare: Mad Max?

Fire up the Thunder dome. The Democrats are in the house and the Max Baucus Plan is in motion – conference call just ended; here are our head of healthcare, Tom Tobin’s, immediate takeaways:

The scariest part of the plan is the Health Exchange, but that won’t happen for 3 years.

The idea is to push everyone into a market to purchase insurance. The question is the margin for those products. 50M additional lives is a significant boost even at 10% gross margins.

In the meantime, Medicare expands to cover younger Americans and SCHIP expands. Medicare Advantage cuts are a sure thing. This wont kill the companies and has been quantified.

No change to employer system until Exchange is created. So no near term risk of further disenrollment or margin pressure from employers anticipating a government plan. This is positive for UNH and AET.

Baucus expects to enact legislation 1H09, but I got the distinct impression he is acting on his own. This may be a problem that delays things.

CBO analysis is likely more favorable this time around as opposed to 1992.

“Devil is in the details” was the key quote.

Baucus expects the plan to lose money initially, but save later. This is the key to the CBO score and pay-go.
If there is any conclusion, device manufacturers are most at risk.

Baucus wants to create a comparative institute to score effectiveness of therapies and allow hospitals to partner with physicians to participate in cost savings initiatives. He also want to ban collaboration with docs and industry. This seems like a recipe for unit pricing declines.

This is perversely positive for R&D, the only engine to generate new products.

Thomas Tobin
Managing Director

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more