Newspaper article THE JOURNAL RECORD

Stock Analysts Endorse Calls for Health Care Reform. .

Newspaper article THE JOURNAL RECORD

Stock Analysts Endorse Calls for Health Care Reform. .

Article excerpt

Wall Street analysts are adding their voices to the debate over how to make the nation's costly, creaking health care system work better.

As the issue takes on increasing urgency in social and political forums, they reason, it promises to exert more influence on the economy and financial markets as well.

Said Jack Lavery, director of global research at Merrill Lynch, in one current report, "the explosion in health-care costs stands as one of the most pressing problems facing the nation today.

"For the overall economy, health-care outlays now represent 12.4 percent of gross national product, up from 9.1 percent in 1980.

Medical-care costs for consumers are rising faster than any other major category.

"Even though all sectors of the economy are paying more, the increase in costs is not being shared equally," he added.

"At the same time, the number of uninsured is rising. Some 33 million people under the age of 65 _ nearly 16 percent of the population, compared with 12 percent in 1978 _ are uninsured today."

One offshoot of all this has been the beginnings of a reappraisal by investment managers of the outlook for some very prosperous companies and industries in health-care businesses.

Pharmaceutical manufacturing, said the current issue of Fortune magazine, is "America's most profitable industry. That will change as insurers and employers demand an accounting."

Whatever reform is in store, however, analysts generally argue that it is much more likely to come slowly than in lightning strokes.

"The immediate reaction of portfolio managers upon hearing political leaders and institutions call for change in our health care system is predictable," said David Lothson, who follows health-care companies at PaineWebber Inc. "It sets off a wave of uncertainty, confusion and pressure on health-care stock prices.

"Investor concern regarding new health-care legislation is premature, in our opinion. …

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