Tags: Scully | Obamacare | healthcare | insurance

Former CMS Administrator Scully: Some Hope to Get Rich From Obamacare

By Michael Kling   |   Thursday, 31 Oct 2013 08:08 AM

While most people are busy either criticizing or defending Obamacare, depending on their party affiliation, some are focusing on making money from it.

Although most Republicans would like to kill the healthcare law, Tom Scully, himself a Republican, wants to make a killing from it, according to The New York Times.

The former Centers for Medicare & Medicaid Services Administrator under President George W. Bush co-founded NaviHealth, a company that streamlines patients' post-hospital care, an inefficient, expensive area ripe for improvements and cost cutting.

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His biggest problem could be competition from other companies that also see opportunity, he tells The Times. "Maybe we’re too early. In five years, there will be a dozen companies like NaviHealth competing in the space. I hope we make it."

While the media is focused on the web-based insurance exchanges, changes designed to control rising medical costs will have a huge, long-term impact. Healthcare providers are currently paid based on how many services they provided. The law is built to change how healthcare is delivered by promoting a value-based model, based on cost and quality rather than volume.

As a believer in free markets, Scully has mixed feelings about the law. He believes private insurance exchanges are a good idea, but he disdains government subsidies to help people buy insurance, The Times notes. But NaviHealth, as well as many of the provisions of Obamacare, brings something different to healthcare.

"It’s called capitalism," he proclaims. "Which doesn’t exist in healthcare, really."

Whatever their politics and feelings about Obamacare, investors must understand the law to protect their portfolios, writes financial adviser Martin Tillier for Nasdaq.com.

The law will benefit the healthcare sector overall, but there will be winners and losers, he warns. Insurance companies, benefiting from an influx of customers, are clearly among the winners. Although gains are already priced into their stocks, the law should create a floor for their stock prices.

Regional companies will benefit more than will large insurance firms, which are avoiding the exchanges.

"The thing about some of these companies, such as Centene (CNC) and Molina (MOH)," he says, "is that they are also big players in the Medicaid provider sphere, and that area is bound to grow under the new law."

Hospitals and residential care homes could suffer due to Medicare savings that the law requires. And lower Medicare payments, combined with rising interest rates, threaten healthcare property real estate investment trusts.

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