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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote (316)5/13/1998 7:09:00 PM
From: Anton Posch  Read Replies (2) of 1722
 
I have been following this thread for a while and enjoying the excellent insights and analysis found here. I finally decided to add my 2 cents. I am a physician working for one of the oldest and in my humble opinion one of the best HMOs in the US. I believe that one often neglected reason for the low inflation of the last few years has been the overall flattening of health care costs. This has been primarily due to price competition among health insurers and the transition to managed care. As a result, most health insurers, including the company I work for, are losing money. Rates must and will go up, because cost cutting has been taken as far as it can rationally go, and too far from some perspectives. Rates for 1999 are currently being decided upon, the only question is how much they will rise. This a tricky proposition for the insurers; if you are too low
you will continue to lose money, too high and you will lose market share. At any rate, health insurance costs are about to start rising again, and this will affect the overall economy in many ways. This is a major portion of labor costs, and is another big factor that could result in an acceleration of these costs and an uptick in inflation.
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