Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

In the next paragraph CBO adds: “Among … enrollees who would Not receive subsidies, premiums would increase by somewhat less than 10 percent to 13 percent.”

An insurance-industry-executive-turned-consultant, Laszewski,cherry-picks the paragraphs he quotes, and doesn’t factor in the subsidies. He does mention their existence, but only in passing: “All of these differences in premiums would be before income-based federal subsidies.” He also doesn’t admit how much of the premium the average subsidy would cover – or how many would benefit.

But Laszewski doesn’t pause to do the arithmetic.

Instead, he throws out numbers based on conversations with unnamed insurance industry sources: “Expect individual health insurance rates for people in their 20s and early 30s to about double,” he warns. If you work for a small company, he asserts, “look for baseline increase of 10% to 20%.”

Recently, Laszwleksi updated his post, quoting Mark Bertolini, CEO of Aetna, who also predicts that “Health insurance premiums may … double for some small businesses and individual buyers.” On average … premiums will rise “25 percent to 50 percent.”

“I expect more health insurers to be echoing the Aetna comments” Laszewski adds. “There is a real concern in the industry they need to get out ahead of this telling people why rates are shooting up  …”

Of course, insurers hope to persuade us that rate hikes are inevitable – while placing the blame on the ACA.

But the truth is that  subsidies are only one reason why both individuals buying their own insurance and employees of small companies are likely to find insurance more affordable in 2014. Insurers’ administrative costs will be significantly lower both in the Exchanges where individuals will shop and in the separate Exchanges where small business owners will purchase insurance for their employees. In addition, there is every reason to expect that an influx of relatively healthy 20-somethings and 30-somethings will be getting into the pool–and lowering premiums for everyone.

To find out why, read the rest of this post on Healthinsurance.org.  If you would like to comment, come back to HealthBeat, and I’ll answer your comments here.

13 thoughts on “Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

  1. Thanks for writing this Maggie. Bob Laszewski’s posts regarding PPACA have been so skewed and misleading I think he should preface each with a listing of the healthcare organizations paying him to write it. It’s hard to believe his writings are the sober-minded analysis of an unbiased industry expert with 20 years of experience, especially when they have so much in common with what an Aetna PR flack would say.

    I’d pay to see you debate him on healthcare.

    • Mike C–

      Thanks. I would gladly debate Bob L. (Maybe you should comment on his blog and suggest this to him.)

      He has been spreading misinformation about health care reform for quite a while.

      I recall how,in 2009 and 2010, he insisted, over and over again, that reform legislation could not pass unless it was
      bipartisan. I assume he hoped to persuade voters that they should write to their Democratic Congresspeople and say “You have to compromise more. This bill won’t pass unless it’s bi-partisan.”

      Of course the Democrats had already compromised (some would say more than they should have) and ultimately, the bill did pass without
      Republican support.

      But because Laszewski has spent so much time effort (and I would assume, money) persuading people that he is an unbiased industry expert with 20 years of experience, they believe he must know what he’s talking about.

  2. I think the average cost of a health insurance policy in 2014 and how that cost gets allocated between taxpayer financed subsidies and costs that must be covered by the individual purchaser are two different things. To the extent that the newly defined essential benefits package requires more comprehensive insurance coverage than previously offered policies suggests that costs will increase. General inflation in medical costs will also drive prices up. The elimination of medical underwriting is virtually certain to drive premiums up especially for young healthy people that were previously able to pass medical underwriting and buy relatively inexpensive policies. The average age and health status of people buying insurance though the exchanges in 2014 vs. 2012 are unknowable.

    So, while some people who qualify for subsidies will be able to acquire an insurance policy for considerably less money out-of-pocket than they could have before the subsidies were in force, Aetna CEO, Mark Bartolini, and consultant, Bob Lazewski, are probably quite accurate in their assessment that the total cost to the insurer and the price to an unsubsidized buyer of individual or small group coverage will be considerably higher starting to 2014 while cost changes for large employers who were already providing comprehensive coverage on a community rated basis will be modest by comparison.

  3. Barry–

    First– on subsidies. You say they will be “financed by taxpayers.” This suggests that in 2014, 2015, etc you and I will be paying taxes to fund the subsidies. This isn’t true.
    The money to finance the subsidies is already built into the ACA and most of it comes from the fees that drug-makers, device-makers, insurers and hospitals will be paying. (They agreed to pay these fees because they realize that the ACA will bring them many new customers.) Another large chunk will be financed by taxpayers earning over $200,000 (over $250,000 for families) who will be paying higher taxes to support the ACA. (This is separate from the Bush tax cuts that were just negotiated during the fiscal cliff
    So the subsidies are already funded– this is not an “unfunded mandate”–

    Next on whether premiums are going higher. You begin your comment: “I think.”
    “I think” is an opinion.
    Families USA developed a sophisticated economic model to assess premiums, and it shows premiums down.

    Show me an economic model that supports your opinion.

    CBO has its own model which shows lower premiums for many individuals and small businesses.

    There are many variables that have to be factored in:
    –insurance will be more expensive because the insurance sold in the Exchanges will be more comprehensive and must cover essential benefits
    –Insurance will be less expensive because the administrative cost of selling and marketing to a large group (all of the people in an Exchange) is much lower than hand-selling to individuals and small companies. In addition, the product in the
    Exchange will be standardized (all must
    cover essential benefits, no deductibles over $2,000, no co-pays for preventive care, etc.) and this further lowers administrative costs.
    –The majority of the uninsured are young and the majority will qualify for subsidies.
    They will use those subsidies to buy insurance, and because they use less medical care than Americans over 44, they’ll bring down the cost of premiums.
    — out of pocket spending will be lower (cap on how much an insurer can ask you to spend out of pocket, even if you’re in the hospital for 6 months: $6,000 for an individual, $12,000 for a family); no co-pays for preventive care, including contraception, no high deductible plans (unless you’re under 30). (When you look at the cost of insurance, it’s important to look at both the premium and out-of-pocket costs)
    –tax credits for small businesses will lower their costs.
    You’re right, of course, that there will continue to be some health care inflation, but as former CBO director Peter Orszag points out “since 2010, the underlying cost of care has been sliding: from August 2011 to August 2012 national health expenditures rose just 3.8 percent. Orszag attributes part of the decline to the ACA. If the trend continues, insurers will have difficulty justifying rate increases.

    (In Massachusettts two large insurers recently filed for decreases in premiums.
    Others are lowering their premiums. This will happen in other states.)

    If, by 2014 or 2015, it’s down to,if the underlying cost of care (and premiums) are growing by say 2.5%,
    it will be keeping pace with GDP growth and, one hopes, keeping pace with wage increases for the average worker.
    That’s not a problem–for the deficit or
    for any of us.
    . The problem, historically, has been that health care costs have been rising by 8% a year (or more) while GDP and wages grew by far less.

    (There is so much waste in our current health care system that even if GDP growth picks up in the future, and GDP is growing by 4%, I think we could keep health care inflation down to 2%. Other countries with populations that are aging most faster than ours have done this. No reason why we can’t.)
    Orszag points out that as we move away from fee-for-service, growth in health care spending will decline further. Moreover, it’s very likely that both private insurers and the government will pay less for drugs and devices. Right now both Medicare, private insurers and hospitals are over-paying. Under reform, hospitals and private insurers will be operating on narrower margins and won’t be able to pay on the higher costs.
    They’ll begin using medical evidence of benefits to the patient to decide which drugs an devices to include in their formularies. Already, some hospitals are beginning to insist that any surgeon doing a knee or hip implant must use one of two devices– not the newest or the most expensive, but the two that medical evidence shows are the best. See Atul Gawande’s article “Big Medicine” in the New Yorker for examples of this. He got his mother into a program which the choice of device was evidence-based and he was very happy with the result. (Up until know, device-makers have been bribing surgeons to use their devices by hiring them as “consultants” and paying them large sums. Under reform, we, like other developed countries, will have “registries” that will let us compare outcomes using various devices.
    (In recent years, large device-makers have been enjoying double-digit profit margins. We can’t afford that.)

    As for drugs, by 2015 or 2016, I’ll be surprised if Medicare, and private insurers are not using “formularies” to decide which drugs they will cover–again based on benefit to the patient. Kaiser, Mayo Clinic and the VA
    already do this.
    The most expensive drugs won’t be included unless they show benefits outweighing risks, and then will
    be covered only for patients who fit a certain medical profile.
    As for Laszewski he has been opposed to health reform from the beginning (In 2009 and early in 2010 he was insisting that it would never pass Congress unless it was a bi-partisan bill. He was totally convinced of this.The vote was far from bi-partisan and it passed.
    Also, the way L. cherry-picks the CBO data undermines my confidence in his forecasts.
    You write “the average age and health of people buying insurance through the Exchanges are unknowable.”

    This just isn’t true. The New Customers coming into the Exchanges will be people who are now uninsured. We know their ages.

    If you read the rest of the post on Healthinsurance.org (http://www.null.com/blog/2013/01/03/will-health-insurance-premiums-skyrocket-in-2014/
    you would know that ,”16 percent of today’s uninsured are children, 55 percent are under 34; and 73 percent are under 44. Ninety percent will qualify for subsidies, which is why 20-somethings and 30-somethings will join the exchanges.” These 20-something and 30-somethings are relatively healthy. (If they were sick they would have done their best to get their children on SCHIP, or scrape up enough money to get insurance for their family. If your wife or child has a serious illness, you will take a job–ANY JOB at ANY Wage– to get insurance. The vast majority of large companies offer a menu of insurance plans.
    Their have also been surveys of people under 40 who are uninsured and who report that they are in “pretty good” health.
    We also know that 75% to 85% of people under 30 in the Exchanges will be eligible for subsidies. (This includes those who now have insurance as well as those who are uninsured.) This is why we know that Americans under 30 will join the Exchanges.
    Finally, the fact that insurers can no longer charge Americans in their 50s and 60s 5 or 6 times more than they would charge a 30-year-old for the same policy will
    raise premiums in some states–but not by as much as you suggest. Under the ACA insurers can still charge older customers 3 times as much. And in 11 states today, insurers are either prohibited from charging older customers more (New York) or the age rating is limited to 3:1– or LESS.
    In those 11 states, younger Americans will not pay more because older customers pay less. .
    In 7 states charging customers more for pre-existing conditions is prohibited; in 13 states charging more for
    pre-existing conditions is sharply limited.

    In those states, younger customers will not be paying significantly more because insurers can no longer “underwrite.”

    This “influx” of new, younger customers should slice average premiums in the individual market “by 7% to 10%” says CBO – even before you factor in the tax credits..

  4. Maggie,
    Appreciate your clarifications.
    Since my premiums have gone up over 60% in the last 2 years, I look forward to a ~10-20% ‘discount’.
    Throughout the recent cliff discussions about health care, I never heard one *big* flap over the IOM’s report on waste….estimated at $750billion/year (=corporate and other provider profit). Why the fear cards first?



    When talking about GDP growth, folks should distinguish between nominal and real, imho. Given enough QE and govt. spending figured into GDP, nominal can be raised quite a bit….which is what I believe they are targeting.


  5. If 20 states currently limit an insurer’s ability to exclude pre-existing conditions, that means that 30 states allow full medical underwriting and full age rating.

    Also, only a minority of states require insurers in the individual market to cover pregnancy.

    The result is that in today’s individual market, a young person can buy an individual health policy for just $100 or $200 a month.

    Of course this is junk insurance if you are a young female, but that is not what we are debating right now.

    Under the ACA, this kind of cheap health policy will in fact disappear. In that limited sense, Laszewski is right.

    The real issue is, so what? Thanks to subsidies,anyone with an income under $45,000 (and in some cases, under $85,000) will get a better policy for a new cost not too far from what they are paying for junk insurance today.

    In other words, give Laczewski his point and move on, as Maggie’s post does here. The number of people under 30 who make over $45,000 or over $85,000 a year is not large, especially outside the large cities like NYC.

    Bob Hertz, The Health Care Crusade

  6. Bob & Barry

    Bob– You make a good point. Junk insurance will disappear.
    This is a goal of reform. (More enlightened states have already cracked down on insurers that try to sell something that really shouldn’t be called insurance.. )
    I would argue that even for a young man, these cheap policies are junk, because he could get into a serious car accident, need spine surgery, and discover that while his insurance covers surgery, it doesn’t
    cover rehab after surgery. This leaves him on crutches. (I know someone who had that experience.)
    Moreover, what’s interesting is that the states that allow full underwriting (charging more for pre-existing condtitions., age and sex) are mainly southern red states where the population is poorer than in northern blue states.
    Thus, more people in these states will qualify for large subsidies and , as you say, will wind up with really good insurance that costs them no more (or only a little more) than what they pay now for junk.
    Moreover, those subsidies will be financed in part by the health care industry (drug makers, device makers, hospitals and insurers that will benefit from having many new customers) and wealthy Americans earning over $200,000 ($250,000 for a couple) who will pay a little more in taxes and who are most likely to enjoy the sizable tax break of havingi employer-sponsored insurance. .
    It’s ironic that the states that will most benefit from reform–and the infusion of federal Medicaid dollars– are the states that are most opposed to health care reform. (Or at least their politiicans are, and most people probably believe what
    their politicians say about a “federal takeover”, “death panels”and so on. )

    Barry– I read the NYT article. It’s talking about what’s happening now–before 2014–as some insurers jack up their rates before the law takes effect. This is also what happened in Massachusetts. But now, the state is cracking down and insurers are both lowering rates and tearing up old contracts that called for sizable increases.
    Insurers know that, after 2014, they will find themsleves in a new, heavily regulated environment. Many will go out of business–or get into a different business .

  7. Once again we have to drag the South into the 21st century, just like we dragged them into the 20th century during the time of Lyndon Johnson.

    Michael Lind has a superb article on this called Uninsured Like Me.

    As for why the red states have harsher underwriting, I do not think it is a deliberate plot against the poor. Rather, it is the habit of all Southern legislators to be solicitous toward big corporations. They are just as supine to auto companies and coal companies and agribusiness as they are to insurers.

    Your post seems to ask why Southern states are opposed to Medicaid, even though more of their citizens will benefit from it.

    Well, there are two reasons, one sinister and one fiscal.

    The sinister reason is that Medicaid allows a poor person to keep living where they are living now. That is true of all national welfare benefits. The Southern elites are troubled by this, because they have been trying with some success to export their poor up North for 65 years. They have wanted to export their poor to New York and Illinois and MN and WI, which had kinder social benefits.

    The fiscal reason was noted by Jeff Goldsmith. Some Southern states have a huge number of people who could come onto Medicaid right now on pre-2014 standards.
    These persons will be up to one half the state’s responsibility.

    States like Texas and Tennessee and Florida have no state income tax. An extra $600 million or whatever of state spending for Medicaid is a big, big deal in their budgets.

  8. Bob–
    Good point about Southern politicians being more interested in corporate lobbyists than in the state’s citizens.
    It’s true that some in the South have been very happy to see blacks move up north– though when the migration began,many blacks who were being exploited as sharecroppers had to move during the night to avoid being caught and beaten or killed for trying to escape the Jim Crow South. (See “The Warmth of Other Sons”–an excellent Pulitzer-prize winning account of that migration–beautifully written. Reads like a novel.)
    The fiscal argument doesn’t really hold water.
    When families that are eligible for Medicaid don’t sign up, it is usually because the state has made the process so complicated that someone who doesn’t have a great education (or for whom English is not their 1st language) will have a hard time. Also, sometimes, some family members are not legal citizens and those who are legal are afraid to sign up.
    No doubt an expanded Medicaid would attract publicity and some who are now eligible would sign up, along with the newly eligible—but I doubt that Southern states would make it easy for them.
    Finally,, since the federal govt will be paying 100% of the cost of Medicaid for the newly eligible during the first few years, and 90% of the cost after that, the influx of federal dollars would more than make up for the extra cost of covering those who are now eligible.
    As Naomi pointed out in a post last summer:
    “First of all, the Congressional Budget Office released a report last week that estimated the additional cost to the states from the expansion to be a 2.8 percent increase over what they would have spent on Medicaid from 2014 to 2022 without health reform. An Urban Institute analysis finds that state Medicaid expenditures would likely increase by at most 1.4 percent over a similar time period.”

    Moreover and this important: The CBO’s estimate—doesn’t consider new savings from the expansion. As a brief from the Center for Budget Priorities explains: “By sharply reducing the number of people without health insurance, the Medicaid expansion will reduce state and local costs for hospital care for the uninsured. In 2008, state and local governments shouldered $10.6 billion, or nearly 20 percent, of the cost of caring for uninsured people in hospitals, according to Urban Institute research.” The Medicaid expansion will also reduce state costs in providing mental health services to the uninsured, which in 2009 amounted to another $17 billion. “Put another way, part of a state’s new costs under the Medicaid expansion will actually substitute for existing state spending on the uninsured.”

    “Finally, future projections of state Medicaid costs fail to include the cost-saving potential of innovative payment and delivery reforms that are already underway in demonstration projections around the country. These include moving patients to new forms of managed care such as accountable care organizations that better coordinate treatment and prevention efforts for the chronically ill and the use of community health centers as medical homes.”

    When the states say they can’t afford Medicaid expansion, they’re ignoring the numbers. They can’t afford not expanding Medicaid. Uninsured poor people are expensive, and in the end, we all pay for them, one way or another.

  9. One thing the ACA has not hindered is the performance of stocks in the health care and life science sectors. I have sometimes used call options to help pay for many of my bills. It is my opinion that many corporations are going to reap huge benefits from the ACA. Time will tell how patients will fare in this apparent business expansion.
    Here are the technical/TA facts:



  10. Ruth–
    The charts don’t tell the whole story.
    As you probably know, I’ve written a book about the bull market of the 80s and 90s (Warren Buffet actually recommended it in Berkshire Hathaway’s annualreport) and while writing it I found Morningstar’s analysts to be among the most reliable.
    Below, what Morningstar has to say about the health care sector and coming reforms. Note that they say that most insurers had been “secretary hoping the the PPACA would be repealed”.
    Under reform, insurers they will get many new customers, but they will be heavily regulated, narrowing their profit margins. Now that the regulations are fairly clear, there’s less uncertainty (markets hate uncertainty) and the stocks are doing better– though this is mainly because the companies hope to make money BEFORE reforms kick in in 2014.
    Pharma — I think it’s very likely that they will have to give people who are eligible for both Medicare and Medicaid discounts. Morningstar says this will bring their stocks down by 7%. They’ll have more customers, but also high fees– that’s probably a wash.
    Medical device makers also will be paying high fees. Many are hoping to make money abroad (primarily in Asia) They know the U.S. will not be as lucrative as in the past.
    Under reform, we’ll see more evidence-based medicine, and both hospitals and insurers will be under pressure to reduce costs–which means they’ll refuse to pay exorbitant sums for devices. The emphasis on “evidence based medicine” under reform is bad news for devices.

    Health care providers (Hospitals)– the outlook is dim.
    Their revenues will be coming down (Medicare is trimming its payments to hospitals by 1% a year each year for the next 10 years. Compounded, that’s a huge amount of money. Medicare will be refusing to pay for “preventable errors.” Hospitals will be under great pressure to reduce costs.

    Managed Care: (Insurance companies)
    It Could Have Been Way Worse
    Although most managed-care firms were probably secretly hoping that the PPACA would get the boot, the industry evaded a major kick in the gut in June when the individual mandate requirement got upheld by the Supreme Court. While the PPACA doesn’t offer many positives for the industry, we note that managed care has long been in the crosshairs of politicians and regulators, so the PPACA’s passage in itself hasn’t made the future overly bleak for companies everyone loves to hate. What the reform did give the industry, however, is an option to capture a sizable chunk of new patients coming into the system starting in 2014. Even with the industry fees and MCR floors (calculations which allow MCOs plenty of wiggle room), health insurers, particularly the ones with Medicaid operations, aren’t faced with extinction. Even more so, there is definitely more clarity on the regulatory front now than there had been during the past decade. With most insurers having ample time to prepare, the industry prospects are actually fairly decent, and the stocks by and large appear to reflect that. The lone exception, WellPoint (WLP), has been plagued by execution issues and recently ousted its CEO; the company’s business model and scale still position it as one of the top names in the industry, so we view its operational mishaps as repairable and shares as attractive.

    Pharmaceutical Industry: Pay Up and Wait for the Next Shoe to Drop
    The reform in itself doesn’t materially affect most pharmaceutical firms, with fees levied on the industry largely offset by the inflow of new patients. A much bigger deal, however, is the likely sequel, “Health Care 2.0: The Attack on Dual Eligibles,” which, surprisingly, gets enough love from both sides of the political aisle. Getting 9 million patients who qualify for both Medicare and Medicaid yet reimbursed at Medicare pricing levels which are switched to Medicaid pricing (roughly 20%-30% below Medicare) would save the overall system $86 billion-$135 billion during the next 10 years (sources: House Oversight and Government Reform Committee, CBO, and the President’s Plan for Economic Growth). Although we still anticipate less than a 50% chance that the conversion will actually happen, the magnitude of the impact on individual companies’ earnings is somewhat material, particularly for companies with significantly greater exposure to Medicare Part D. We estimate Bristol-Myers (BMY), Eli Lilly (LLY), Celgene (CELG), and Actelion (ALIOF) could see a 7% or greater hit to earnings if the legislation is passed. The impact on most other pharmaceutical and biotechnology companies is far less meaningful.

    Devices: Reform Is a Blessing in Disguise
    Clearly, the medical-device segment fared worse than any other part of the health-care industry as a result of the PPACA, and we struggle to find many positives directly related to the reform. But the increased regulatory and reimbursement scrutiny, along with the 2.3% excise tax commencing in 2013, at the very worst provided a nice wake-up call for the industry previously mired in complacency. Even before the PPACA, we had seen some warning signs flashing regarding the Food and Drug Administration’s changing stance on the device-approval process and hospitals balking at the device makers’ insistence to charge higher prices for products providing limited benefits to patients. At the same time, the device industry wasn’t very swift to adjust its cost structure to align it more closely with both the shifting demand for technological advancement as well as demographic patterns. The horse is out of the barn now, and while device companies will probably point to the device tax as key reason why they are moving more of their operations overseas, particularly into emerging markets, it is clear that the developed world isn’t quite as lucrative for the industry now as it was a decade ago, and the bloated infrastructure in the U.S. needed to be adjusted sooner or later. The emphasis on emerging markets as well as truly innovative products is a positive for an industry desperate for growth, so at the very least, the reform serves as a catalyst for these changes. Arguably, the reform actually widens the moats of some of the larger device players; raising the costs for start-ups/emerging technologies has in turn put more power in the hands of industry behemoths, making them even more appealing as partners or acquirers of intriguing technology at earlier stages. Thus, we still have a number of recommendations in the device space, most notably Covidien (COV), St. Jude (STJ) and Abiomed (ABMD).

    Health-Care Providers: Not All Roses
    Hospitals’ stocks popped with the Democrats’ win as investors decided that close to one fifth (depending on the hospital) of the revenue service providers previously wrote off to charity care/uninsured discounts is coming back straight to the bottom line. Well, first of all, it isn’t quite that simple. Hospitals are clearly better off now than they were before the PPACA (particularly with unemployment soaring and the commercial insurance ranks tanking). But not all individuals will enroll in 2014, and many of the ones who do are likely to receive Medicaid reimbursement (which is much stingier than that of private payers or Medicare). Second, hospitals have an unenviable stuck-in-the-middle position, where reimbursements in general are coming down, yet the hospitals’ ability to pass down these cuts in the form of ASP decreases and lower salaries is generally limited. As such, hospitals, being the no-moat industry, are likely to bear the brunt of federal government’s health-care cost-squeezing efforts. Additionally, new efforts to tie provider payments to quality-control measures have also forced hospitals to invest in IT. The segment doesn’t have much positive going for it, from our perspective. At this point, we don’t recommend any hospital stocks