“The bill is needed to ensure that the NHS is more efficient. It is needed precisely to avoid a situation happening in the future where a Labour Government allows a £20bn productivity black hole in the NHS from opening up.”
According to a report into the healthcare systems in seven industrialised countries, the UK is one of the most efficient in the world.
The Commonwealth Fund report ranked the Netherlands as having the best service overall, based on quality, efficiency, access to care, equity and healthy lives. The UK and Australia followed.
The view across the pond
Sam Islay, manager of the Worldwide Healthcare fund, argues that long-awaited legislation in the US - which made glacial progress during Barrack Obama’s first term but that may now be expedited following his re-election - is likely to lead to a system that mirrors that in place this side of the pond.
“We are creating in the US what may become quite similar to what is already in place in the UK and that is ‘single payer’ national health. The single payer in the UK is the government. The US is all private pay right now, it’s not an overlay and we are going to start with a single payer overlay which will migrate over the years to look something like the UK.”
Paul Atkinson, head of North American equities at Aberdeen Asset Management, explains: “The legislation seeks to expand the rolls of the insured through an individual mandate to purchase coverage, while requiring health insurance companies to cover pre-existing conditions and some preventive services.”
The corollaries from this legislative move have prompted fund managers to move away from their traditional stalwart insurance securities.
Over recent years, Mr Islay has seen a switch away from the US health insurers that historically have been included in his fund and moved more towards the US hospitals that are more likely to benefit from the ‘Obamacare’ legislation.
He says: “You have the health insurance companies in the US – HMOs – and they are in a long term decline. The US HMOs have suffered in stock price and will continue to do so. In our fund, we own US hospital companies and we own very few insurance companies.”
However, the manager admits that in the US long term profits from these stocks are in decline.
“Sooner or later, it is going to look like the NHS in the UK which is under attack and people go on strike because prices are squeezed. On a long term basis for us, we should be looking at emerging markets,” he says.
