What's Realistic for Health-Care Reform? (Morningstar)

Pat Dorsey: Hi I'm Pat Dorsey, Director of Equity Research at Morningstar with a new administration taking charge of the White House soon what’s on everyone’s mind is what will that do to the economy. And that especially how they bigger the industries like the Health Care Industry which of course was the subject of many problems since the Obama campaign about reform and changes to the Nations Health Care System. I have with me analyst to talk about what could or could not happened. Could it be with the incoming Obama administration? Thanks for joining me Bill. Bill: Thanks for having me. Pat Dorsey: So big picture you know what I mean he made a lots of promises but we’ve had a few things going on in our financial system since then. And so you wouldn’t mind want argue that the world has changed and maybe perform what will happened in ’09. Bill: Yeah, I mean if you go back to the summer when he was campaigning this was one of the issue his talked about and of course the fall over run all of it all the sudden. The economy took center stage. I’m thinking at this point that he has a lot of fisher fryer’s a lot on his plate you know as you know that they just disapprove the second half of the bill up money yesterday which is $350 billion. I would say that Health Care well it’s going to remain one of his top domestic issues on his agenda. I would imagine that it’s going to take its place behind the economy right now. Pat Dorsey: And also the scope of any plans has to get reigned in because not has it maybe sort of come down on the priority scale we simple can’t afford to do what we may have wanted to because the Nations Balance Sheet is a little more stretch than it was six months ago. Bill: Nations Balance Sheet is definitely stretch I mean if you think about it were hearing cost estimates in the $50 to a $100 billion range on this program. I think people are very weary right now of this big governments spending. I mean I think you saw some of the Congressman protest back in there time with the original bail-out-bill. I think we’re in a little bit of you know too much federal spending, we get to reign it in, I surely don’t think we’re going to see a case where, were going to prove a 50 to $100 billion government entitlement on top of this bill-out-money. When you consider that, we have other entitlements like medic care and social security, which are also struggling right now. Pat Dorsey: So let’s move finding a general to be specific you know one of the big issues on the table has been sort of allowing government to negotiate directly with pharmaceutical companies and does perhaps bring down our very high cost for our branded pharmaceuticals. Do you think that made that place? Bill: A big pharmacy is definitely in the cross heirs of the Obama administration right now. we’ve talked about negotiating you know prices for medic care that honestly would not be a good thing on the big pharmacy. But I would say that at the end of the day assuming that they’re all the parties that are going to sit down to the table and talk about big pharmacy has got obviously a very powerful lobby. I would expect that this isn’t something that’s going to happened without a huge fight so I think that they might end up being some compromises there. One of the other issues that’s one the table though is drug re-importation which also would bring down cost. I think that would be that can be a problem for big pharmacy as well. But I think ultimately again you're going to see compromises come out of this, they’re lavish, they are too strong for big pharma and I think at the end of the day they're all going to sit down and kind of compromise on these issues. Pat Dorsey: And that’s how were going to be on going over all theme with all of these is that you sort of you know have a big proposal, the lobbyists get in there the, the Congressmen argue about it and it winds up coming out the other end of the sausage machine looks kind of different the one in the front. Bill: Yeah, exactly I think at the end of the day what you’re going to end up seeing is when they do and act on health care is a kind of reformed program with some caveats or some input from the Republicans and input from the Democrat’s. I don’t think you're going to see a huge national programs, its going to be in a little bit of everything. Pat Dorsey: And if you had the other—there has been a lot of different thing you that is beside I mean this is the big nut right, instead of doing direct negotiation. It’s big pharmaceuticals you know all of the various proposal or forms have been toast out there could name for name one that you think is out there and more lucky to go through and one that people are thinking is like. Maybe you’re like “Wow, I’m not sure it’s going to be actually happened.” Bill: That’s a good question I would say that you’re definitely going to see Obama and his administration hammer down on administrative cost in Health Care. Immediacy cost make up a third of the entire Health Care budget. There’s a lot of movement right now towards you know electronic. Pat Dorsey: Electronic, records. Bill: Records and what not, I think that’s one thing that you're going to see. Pat Dorsey: See if we match you get some movement on that because you’ve been talking about for 10 years and not much has happened. Bill: I’m talking about it forever but I think that he’s got to pick his battles and if you’re not going to get you know medic care and big pharmacy to negotiate you might have to win some smaller victories with something like this. Pat Dorsey: And people arguing against cutting waste it’s kind of a like you need to smell Kentucky’s. Bill: It’s exactly right. And then one way to which one sort of that you think won’t go through that that just you know dead in the water. I would say for me based on what we talked about earlier the power of the lobby I really find it hard to believe that we’re ever going to do Drug Re-Importation. Suddenly because the FDA has come out and said there’s a lot of safety issues around this and its something that I think the big pharmacy can hide behind it. At the end of the day that you know do we really want a real rotation that where the drugs are coming from, from abroad with the safety issues in here and then that. Pat Dorsey: Great stuff thanks for the interview Bill much appreciated. Bill: Thank you. Pat Dorsey: I’m Pat Dorsey and thanks for watching.