The Senate Fails to Repeal Obamacare(ho hum), and How to Get Rich From Obamacare

What's the use of happiness? It can't buy you money.
Henny Youngman

http://privatehealthinsurancecompanies.org/blogit/Aetna-Withdrawing-from-Colorado-Individual-Health-Insurance-Market/

The Senate voted along party lines and did not repeal Obamacare, the entire process was orchestrated political theater designed to stake out territory for the 2012 elections. I have outlined the political and legal playbook in multiple previous posts(8/3/10, 10/15/10, 11/17/10, 12/14/10), and there have been no surprises. Congress will not overturn the bill, although they may not fund it. Legally I emphasize that the only opinion that matters is that of the Supreme Court, and they have not spoken. Until they do, probably next year, all is idle speculation.

Shifting gears, I have been thinking about the potential opportunities presented by Obamacare for the intrepid entrepreneur or investor. The disruptions, dislocations, and re-engineering mandated by the bill will result in incredible opportunities for the smart, the insightful and the lucky.

Doctors learn quickly that minor events can have major impacts in far-removed regions. A small tumor of the ovary can cause fluid in the opposite lung, a node in the neck may be from a stomach cancer, and an unseen lesion in the chest can cause the fingers to swell. Just like Ben Bernanke’s low interest rates caused food inflation overseas, leading to revolt, and whatever else in Egypt, it is should be no surprise Obamacare will have far reaching and as yet undetermined effects.

We can think of the changes produced by Obamacare as first, second and third order. First order impacts would be increased taxes and increased coverage. Secondary changes would be doctor shortages and consolidation of insurance companies. Figuring out the third order impacts is harder and also represents an incredible opportunity. Just like those few investors who anticipated a housing collapse were able to make fortunes, whomever has the insight or foresight to discover some unanticipated outcome from the thermonuclear impact of Obamacare stands to prosper.

The reference article today probably falls into the secondary impact level. An insurance company in Colorado is pulling out of the state due to the 80% rule, which I previously predicted. The general trend would be one of consolidation of insurance companies, and one could invest in smaller insurance companies, expecting them to be bought by the larger ones.

However the real opportunities come from being able to foresee unintended events. I have no crystal ball, but could easily envision the failure of companies that exist solely because of overly generous medicare payments. Scooter companies, dialysis companies, medical imaging companies and private cancer care companies come to mind. Expensive treatments of questionable value including spinal implants, pain centers, inpatient drug rehabilitation and some types of chemotherapy may be targeted. Large drug companies may no longer be able to maintain their premium pricing, and the pharmaceutical development industry may no longer be viable, as new drugs may simply be too expensive.

On the positive side, whoever can lower costs by automating medical care, perhaps by doing basic medical testing and simple treatment online, will make fortunes. The new medical cooperatives outlined in the bill are really just non-profit insurance companies, they will need back office automation and support. Companies that can hirer doctors and supply them to newly insured in poor areas will prosper. What do you think?