MarketWatch recently reported that Trump’s victory in the 2024 presidential election contributed to a decline in many publicly traded healthcare stocks. Might U.S. patients have a reason to smile?
It depends.
The price of any stock, whether pork bellies or healthcare, is driven by expected future earnings. The more profit a company is projected to earn, the more people will pay for the stock, expecting higher returns.
Presumably, the executives at “Big Pharma,” viz., Eli Lilly and Pfizer, and major insurers like Healthcare Corporation of America (HCA) and Tenet believe that a Trump presidency along with Republican control of the Senate and possibly the House, will hurt profit margins.
Insurance profits
Rates for insurance premiums – insurers’ income – are driven by government regulations given the dominant role that government bureaucrats have in the negotiated premiums. Insurers’ income is thus largely determined by the number of people who purchase their policies. Insurers’ expenses are driven by federal “allowable” reimbursement schedules and actuarially predictable medical needs.
To generate profits, insurance carriers use the “3D” strategy: delay, defer, and deny payment to providers through multiple review procedures, and claiming a necessary treatment is experimental. This strategy is highly effective as health insurance has been one of the most profitable industries. By creating profit using the 3D strategy, insurers reduce patients’ access to medical care measured by lengthening wait times for care.
The drop in stock prices seems to signal a belief that health insurance profits will decline with Republican control of executive and legislative branches of government. If profits rise by reducing care, might the converse happen? Could shrinkage of insurance profits direct more money to care providers and thereby increase access? If so, Americans would have cause to smile.
Pharmaceutical profit
Prior to COVID-19, pharmaceutical profits were influenced greatly by government actions but also by market forces. As more consumers decided to buy their products, “Big Pharma” made money. That changed with COVID-19. They received substantial funds from Congress through the negotiations by the Trump administration and Congress to help speed up the vaccine process. The amounts paid to these companies increased after the vaccine was ready and Trump urged everyone to get one. But when pharmaceutical manufacturers convinced the Biden administration to mandate injection of all Americans with their experimental genetic treatment falsely called a vaccine, they became rent-seekers. Instead of their products being subjected to market forces, the government paid them a guaranteed fixed price for hundreds of millions of doses.
Billions of dollars in healthcare spending were diverted from paying care providers to Pfizer, Eli Lilly, et al for a medically adverse and ineffective medication all Americans were ordered to take. More “healthcare” spent on corporate profits and thus less money available for patient care. With COVID-19 rent-seeking over and pharmaceutical stock prices down, might more money be diverted back to actual patient care?
A second, non-monetary adverse effect of the Big Pharma diversionary scheme was their loss in credibility. As a result of their data distortion and fabrication, censorship, and injecting the public with harmful substances, Americans began to distrust all vaccines, driving down the acceptance rate for all vaccines, not merely the mRNA COVID-19 jab.
Bureaucratic “profit”
While healthcare companies divert billions from patient care to private profits, government bureaucracy diverts trillions!
Last year, federal spending on the healthcare system in America was $4.8 trillion[VG1] . Thirty-one percent to more than 50 percent of this went to pay for BARRCOME: bureaucracy, administration, rules, regulations, compliance, oversight, mandates, and enforcement. Thus, Washington diverted $1.5 tr to $2.4 tr from paying for Americans’ medical care to paying...itself.
When unsuccessful candidate V.P. Harris recently promised to provide “free” home health services to Medicare benefits, to pay for it they cut payments to physicians by 2.9 percent. More benefits on paper and more money to insurance companies – less real care provided.
Seesaw effect
When healthcare dollars go to corporate profits, provide no-charge government insurance (Medicaid), or pay for BARRCOME, fewer dollars are available to pay for patient care. This “seesaw effect” – nonclinical healthcare spending up, access to medical care down – has been well demonstrated in Medicaid. It is equally true for Medicare. President Obama’s signature healthcare legislation, the falsely labeled Affordable Care Act (ACA), took at least $716 billion out of the Medicare Trust Fund intended to pay for seniors’ hospital care and used those funds to pay for ACA infrastructure.
Conclusion
Hopefully, President-elect Trump, possibly aided by Elon Musk and others, can reduce the financial diversion and inefficient spending of healthcare dollars that go to corporate profits and ever-expanding bureaucracy. If they can initiate a patient-driven, market-based approach to health care, potentially trillions of scarce taxpayer dollars can either be spent on patient care, reversing the seesaw effect, or they can be returned to American pockets, where they originated so they can afford to pay directly for timely, quality care.
Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of Center for Healthcare Policy at Texas Public Policy Foundation; former Director of New Mexico Health Insurance Exchange; and author of 12 books, including multi-award winning, Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine. Follow him on X.com at @DrDeaneW or contact him via www.deanewaldman.com.
Vance Ginn, Ph.D., is president of Ginn Economic Consulting, host of the Let People Prosper Show, and previously chief economist of the Trump White House's Office of Management and Budget. Follow him on X.com at@VanceGinn.
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