The Weekend Edition is pulled from the daily Stansberry Digest.
We all know the U.S. health care system is a mess...
But most of us don't understand how all the pieces interact with one another. We can exploit that knowledge to better navigate the system... and for financial gain.
For example, if publicly traded hospitals have good earnings, then the insurers may see profit margins shrink. The insurers pay for those hospital services.
Did you know that every February, Medicare announces what it will pay to insurance companies for the upcoming year? The stocks of Medicare-focused health insurance companies react quickly to this news. But only sophisticated investors know this.
How about this? When the government becomes concerned about the price of prescription drugs, the stocks of pharmaceutical companies and pharmacy benefit managers are going to be pressured. We're seeing this right now.
Do you know what "Medicare for All" is? Do you know how it could impact you? Do you know which stocks will benefit... and which will suffer?
The system is wildly complex...
It is costly. It is unpredictable. It is incredibly frustrating when you are a patient. It also produces less-than-stellar results.
But it is also full of money... A lot of money.
And nothing on the horizon suggests that will slow down.
Currently, health care spending makes up about 18% of the total economy. It's forecast to grow to almost 20% by 2027. That is an increase of $2.4 trillion on top of what we're spending today.
That increase alone is roughly as much as the total economies of Mexico and Australia combined.
This makes the U.S. health care system a huge opportunity for investors...
Entire hedge funds are devoted just to health care. You should better understand the system and benefit from it... especially now, as we approach the next presidential election.
In 2020, health care will again be a front-and-center political issue. Candidates and commentators will expend a lot of energy discussing what the next solution will look like. That will lead to speculation about the winners and losers. Stocks will move up and down.
And for perhaps the first time in my lengthy career, we've reached the tipping point...
You see, I'm Stansberry Research's newest analyst. But I'm not a new analyst.
I've spent more than 20 years analyzing the health care sector. I've worked all across the health care landscape...
After graduate school at the Johns Hopkins Bloomberg School of Public Health, I was recruited to a Wall Street job. My background set me apart from the competition. I spent the next 18 years analyzing companies and picking stocks.
When it comes to navigating the health care system, I consider myself an educated consumer. Not only has my entire professional career been in health care, but much of the dinner-table talk during my childhood involved health care, too. My mother was a nurse-turned-health-care-executive in this crazy system.
Since my career began, a consistent theme from mentors, bosses, and customers has been "current trends cannot continue."
Yet they have continued... for decades. Sky-high costs. Mediocre quality. Bad laws.
Until today. Now, things are changing. I believe we've finally reached the point where the old ways really can't continue. And investment opportunities will be created...
Innovative providers are reacting...
Today, a new wave of mergers is reshaping the industry.
Insurance company Aetna and drugstore chain CVS Health (CVS) have merged. The deal was completed in November. We've never seen this type of combination before.
This merger represents a big step toward the industry treating health care as the ultimate consumer product.
You can expect CVS stores to change dramatically in the next few years...
Imagine walking into your local CVS store to get your annual physical – and a flu shot. At the same time, a young girl is sitting near the back of the store getting tested for a peanut allergy, while a young athlete is in another room getting an X-ray. Access will be easy – 9,900 stores with approximately 1,100 clinics. And even better, prices will be transparent.
Similarly, in December, insurance firm Cigna (CI) completed its deal for pharmacy benefit manager Express Scripts. Pharmacy benefit managers are the "middlemen" between the pharmaceutical companies and your medications.
Cigna made this move so it can control a bigger part of the medical dollar – prescription drugs. The data it can get from this change will also support the company in predicting the future health care costs of its members. That will help support its earnings growth.
And maybe you've heard about a new venture between Amazon (AMZN), Berkshire Hathaway (BRK-B), and JPMorgan Chase (JPM)... It has been named "Haven." These organizations will be breaking the mold of health care in our country... And technology will be a huge part of it.
Since "Obamacare" became law in 2010, we've seen all types of innovative health care efforts...
They've reached across a broad spectrum of ideas.
The seven companies I mentioned above are all examples. Their sheer size and influence on how we live raises the conversation to a national level – if not a global level.
But similar changes are taking place in all corners of the industry, including in the areas of...
Technology – Startups are all over health care. Take, for instance, Cardiogram... a company that uses your Apple Watch to monitor your heart. Or Everseat... a company that lets you schedule your doctor appointments online. Or Emocha Mobile Health... a company that uses your smartphone to help you take your medicine.
These three solutions are giving individuals the tools to more efficiently manage their health care. Just as important, they all add to the growing amount of big data in health care. In turn, the data will help us analyze what works and what doesn't.
Health insurance – Frustrations with health insurance have led to the creation of companies like Oscar Health in New York. It's a health insurance company that you will actually enjoy interacting with...
Oscar lets you do everything you need in the palm of your hand. It has redesigned many parts of how you interact with your insurer. You can even have a "virtual" doctor visit over your phone. Imagine this... Your kid spikes a 103-degree fever. You need answers now. "Doctor on Call" is right there for you. And as an Oscar customer, it's free to use.
Alternative therapies – Medical marijuana has been both applauded and criticized across the country. Medicinal cannabis offers solutions for pain management, along with many other uses. And it works without a lot of the side effects and complications (such as addiction) that come with other "conventional" pain drugs.
I am an angel investor in a start-up medical-cannabis company... And the investing implications of this emerging market are the biggest I've ever seen.
(This is one of the first investment opportunities I'm exploring here at Stansberry Research. This coming Wednesday, at 8 p.m. Eastern time, we're hosting our first-ever Cannabis Investing Event on what's in store for this industry... whether now is the ideal time to invest in the space... and much more. You can register for the event right here.)
Is Amazon going to be late to this party? – No way. Amazon will be a driver of innovation in health care. It will be disruptive.
Besides the Haven project with Berkshire Hathaway and JPMorgan Chase, Amazon recently bought PillPack. This company customizes your medications and delivers them to your front door. Each pill is conveniently packaged and comes with instructions on when to take it.
More deals like this are inevitable. We can use them as consumers and invest in them.
What will come of all this?
Things are indeed happening... And they will be for the good.
We can invest in many of these companies today. We can exploit the impending system changes for our financial gain. And many of the startups we've seen in recent years will go public.
It will all lead to great new things for us as health care customers. It will also create a robust investment environment.
And most important, we'll be watching all of it here at Stansberry Research.
Good investing,
Thomas Carroll
Editor's note: On Wednesday night, we're hosting our first-ever Cannabis Investing Event. During this FREE event, Thomas will help you learn why 2019 will change the future of the space in America and much more. Plus, just for tuning in, you'll get the name and ticker symbol of one stock that could soar 500% in the years ahead. Save your spot right here.