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In the next 18 months, the Patient Protection and Affordable Care Act – known informally as Obamacare – is going to completely overhaul the American healthcare system. And investors who aren't properly positioned for what's coming could miss one of the biggest profit opportunities of the decade.
"While almost everyone is hung up on the law itself and its economic sustainability," says Money Morning Executive Editor Bill Patalon. "Smart market-watchers are already moving to invest in the individual sectors poised to profit."
Editor's note: Obamacare's biggest winners will surprise you. See what I mean .
According to Patalon, Obamacare will add approximately 30 million new patients into the healthcare system – and pump $900 billion into healthcare spending.
And government forecasts show that total healthcare spending will grow at an average rate of 5.7% a year, far outpacing the predicted growth rate of GDP.
Those massive increases will have a profound effect on profits and bottom lines in the private sector.
But not all healthcare stocks will profit equally – or at all.
Obamacare is bringing a complex set of new taxes and penalties with its promise of higher sales and increased revenue. Some members of the healthcare sector could lose more than they gain under the new world order.
Editor's note: Thanks to Obamacare, one "beaten-down" market sector is poised to skyrocket above the rest..
Still, Patalon notes, Obamacare will drive higher profits in a number of businesses. The biggest profit spikes will come in three of healthcare's most important industries:
- Large pharmaceutical companies – Last year, spending on medication in the United States reached a remarkable $320 billion. And the country's 30 million new insurance holders will translate into even bigger sales for Big Pharma.
- Hospital management companies – Near-universal health insurance coverage means hospitals are able to guarantee payment from thousands of patients who wouldn't have been able to pay before. That means higher profits and much smaller write-offs for hospital companies in the future.
- Health insurance companies – Under Obamacare, insurance providers will be gobbling up new customers by the millions. And with the single-payer penalty (or tax) upheld by the Supreme Court, many of these new customers will be the insurance industry's favorite kind – those who are healthy and paying for services they hardly use.
"All three will see chart-busting growth in the 'new healthcare economy,'" says Patalon.
And investors who chose wisely inside these three industries could see the same sort of chart-busting growth in their investments.