Newspaper article The Christian Science Monitor

Winners and Losers in Clinton Program

Newspaper article The Christian Science Monitor

Winners and Losers in Clinton Program

Article excerpt

CHANGE brings both threats and opportunities, and the changes proposed by President Clinton are no exception.

For the next four years, the United States will have a more activist government. The expansions of government will not be in the entitlements that bolster consumer purchasing power. Rather, the major initiatives will extend civilian government markets. This shift will create opportunities for industrial-oriented companies, such as construction firms, high-tech manufacturing industries, and consultants.

Let us run through the key elements of the Clinton program, looking for winners and losers.

The first out of the box is infrastructure, initially roads and bridges. But the big money will go for innovative projects such as a "clean automobile" powered by batteries or hydrogen, high speed mag lev (magnetic levitation) rail networks, and a national information "highway" to link computers all over the US. The obvious winners will be companies that win those contracts such as telecommunications equipment suppliers. But there also may be lots of losers, notably the companies the government will be competing against.

On health-care reform, Mr. Clinton's initial target is the pharmaceutical companies, even though medicine is often the most cost-effective part of health care. These companies will be hurt by price controls. But they may benefit from the higher volume resulting from including drugs in the standard health-insurance coverage.

Dealing with the combination of rising costs and lack of coverage will be extremely difficult. Providing universal coverage raises costs. Most large and medium-size companies already provide health insurance. The small companies are the heart of the problem. That likely means government subsidy. Excise taxes are the initial financing sources. If they don't raise enough, a value-added tax is an alternative.

Slowing down the health-care cost escalator is the real challenge. Expanding health maintenance organizations (HMOs), with a yearly fee per patient set by government, supposedly will force them to control costs. …

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