VCs: Healthcare reform won't impede med-tech investment

June 9, 2010 by Edward Berger

An informal survey of venture capital investors reveals their lack of worry that the healthcare reform act will slow down investment in medical technology.

VCs: Healthcare reform won't impede med-tech investment

Readers of this website, and this blog, are likely to have a special interest in the business impacts of healthcare legislative and regulatory initiatives. But when those initiatives are complex, with major societal implications and long implementation timelines, the likely effects on business operations, profitability and/or viability may not be obvious. When that is the case — as it most certainly is with this year's healthcare reform legislation — it is often necessary to evaluate diverse perspectives and attempt to determine which among conflicting projections are more likely to be accurate. My personal prejudice? Be skeptical of those who are directly impacted; follow the people who follow — or supply — the money.

The legislative battle over national healthcare reform seems like ancient history. Our political attention span grows ever shorter, and we've moved on to financial system reform and the environmental havoc in the Gulf. So it is sometimes hard to realize that President Barack Obama signed the new healthcare law on March 23, a scant 11 weeks ago. Still, that is time enough for policy wonks (mea culpa), healthcare executives and other attentive publics to think more clearly about the likely impact of reform than they could during the heat of legislative battle.

At the systemic level, there are some things we can know with a high degree of certainty about the effects of reform, because of unambiguous mandates in the law: There will be broader insurance coverage for preventive care; health insurers will no longer be allowed to deny coverage on account of pre-existing conditions; health insurance policies will not have annual or lifetime coverage limits; kids will be able to stay on their parents' policies until age 26; a federal high-risk pool will help the uninsured find insurance until mandated health insurance exchanges take over that task; health insurance policies will need to meet or exceed defined medical loss ratio (the proportion of total expenditures that go to pay for covered services) standards of 85 percent for group policies and 80 percent for individual policies; and expanded Medicaid eligibility standards will provide healthcare coverage for more of the near-indigent.