The Impact of Reform on the Health Care Industry

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The Impact of Reform on theHealth Care Industry

• Rosanne Ott
• Senior Vice PresidentPortfolio Manager

GMHSF/8.12.04
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Topics

• Background
• What types of reforms are being considered?
• Most likely outcomes and timing
• Potential impact on current plan sponsors
• What are costs? Who will pay for plan?
• How are changes implemented?
• Opportunities

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Background

• Credit Markets and Bubbles
• Hospitals
• Revenue sources tightening
• Less access to capital
• Reduction in charitable donations
• Private pay and Medicare
• Operating budgets Tightening
• Campaign Healthcare tied with the economy
• Macros Credit markets seizure increased
  unemployment need for healthcare reform great
  uncertainty

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Types of Reform Being Considered

• Public Health Plan 45 million Americans
  uninsured
• Private Pay
• Issues
• Logistics
• Infrastructure
• Tax codes
• Implementation
• Competition

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Most Likely Outcome, Timing, and Impact

• Combination with premiums funded by taxpayers
• Timing Early 2011 with possible phase-in
• Potential impact on
• Current plan sponsors
• Hospitals
• Suppliers
• Innovators

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What are Costs? Who Pays?

• February 24 President Obama proposal
• 634 billion 1.0 to 1.5
  trillion
• 318 billion Higher taxes
• 190 billion Increased taxation offshore
  earnings
• 200 billion Other
• Medicaid drug rebate, charitable donation limit,
  mortgage interest limitations, and lots more!)

10 year reserve
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Opportunities Created by President Obama

• Campaign
• Life Sciences
• Bio-Generics
• Health Care Information Technology (HCIT)
• Insure the uninsured

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Opportunities Created byPresident Obama

• Now in Office
• February 9 Stimulus 778 billion
• 19 billion Medical Records Recovery
• 10 billion Life Sciences National Institute
  Health (NIH)
• 600 million Cancer Research
• Future Winners Level playing field
• All of healthcare wins, for a price?

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WALL STREETS ODDS OF HEATHCARE REFORM
PASSING 99.9
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Conclusion

• Tremendous Amount Of Unknown Remains But.
• REFORM WILL COME
• NOT ALWAYS AS BAD AS PROPOSED
• LEMONS MAKE LEMONADE!

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Disclosure
The views expressed are as of May 8 these views
may change subsequent to this date, and they do
not guarantee the future performance of the
markets, the Alger Health Sciences Fund, or any
other mutual fund managed by Fred Alger
Management, Inc. they are not meant to provide
investment advice, should not be considered a
recommendation to purchase or sell securities,
and there is no guarantee they will materialize.
Investors should not consider references to
individual markets or sectors as an endorsement
or recommendation to purchase or sell such
markets or industries. Additionally, any sectors
mentioned, if owned, were purchased or sold as
part of an overall portfolio, and therefore
reference to them herein should not be construed
as a recommendation or offer to purchase or sell
any such sector. Transactions in such sectors, if
any, may have been made for a variety of reasons,
including, without limitation, in response to
cash flows or due to inclusion in a benchmark. A
Word About Risk Growth stocks tend to be more
volatile than other stocks, as the price of
growth stocks tends to be higher in relation to
their companies' earnings and may be more
sensitive to market, political, and economic
developments. Investing in companies of all
capitalizations involves the risk that stocks of
small- and mid-sized companies are subject to
greater risk than stocks of larger, more
established companies, owing to such factors as
limited liquidity, inexperienced management, and
limited financial resources. The Alger Health
Sciences Fund concentrates its investments in the
health sciences sector. As such, the value of the
Funds shares may be more volatile than mutual
funds that do not similarly concentrate their
investments. Performance current to the most
recent month-end for the Alger Health Sciences
Fund or any mutual fund managed by Fred Alger
Management, Inc. may be found on
www.alger.com. Investing in the stock market
involves gains and losses and may not be suitable
for all investors.
HSPP 0509