The President Wants You to Get Rich on Obamacare

From the New York Times –

Tom Scully bolted through the doors and up the stairs to a private dining room on the third floor of the �21� Club. Scully, 56, is slightly taller than average and has tousled graying hair, an athletic build and a lopsided smile. He typically projects a combination of confidence and bemusement, but on this rainy September afternoon, he was frenzied. Scully was scheduled to deliver the keynote address at an event hosted by the Potomac Research Group, a Beltway firm that advises large investors on government policy (tag line: �Washington to Wall Street�). Today�s discussion centered on the most significant change in decades to the nation�s health care policy, the Patient Protection and Affordable Care Act, a.k.a. Obamacare. As Scully walked to the front of the room, some 50 managers from hedge funds, mutual funds and private equity firms tucked into the round tables. Others gathered in the hallway. A hush of anticipation hung in the air.

During the past year, anxiety about the onset of Obamacare has created a chill in some parts of the economy. While large health care businesses � insurance companies, for instance, and hospital chains � have poured significant resources into preparing for millions of new customers, countless investors have appeared spooked by the perpetual threats to repeal, or at least revise, the law. According to Thomson Reuters, private equity investment, usually the lifeblood for entrepreneurialism, has dropped by an astonishing 65 percent in the health care sector this year.

Scully has been trying to assuage these worries, but the nervous questions keep coming at him. Before he even began his speech, one attendee said he feared that only three million new patients, far fewer than estimated, would be signing up for insurance. �No way,� Scully said. �Way more � way more. At least 15 million, maybe 20 million. The Democrats have a huge incentive to make this work.� Another asked if Scully was worried about Congressional repeal. �It�s just not going to happen,� he said. �Don�t pay attention to Rush Limbaugh.� When Scully finally began his speech, he noted that the prevailing narrative among Republicans � assuming that many in the room were, like him, Republican � was incorrect. �It�s not a government takeover of medicine,� he told the crowd. �It�s the privatization of health care.� In fact, Obamacare, he said, was largely based on past Republican initiatives. �If you took George H. W. Bush�s health plan and removed the label, you�d think it was Obamacare.�

Scully then segued to his main point, one he has been making in similarly handsome dining rooms across the country: No matter what investors thought about Obamacare politically � and surely many there did not think much of it � the law was going to make some people very rich. The Affordable Care Act, he said, wasn�t simply a law that mandated insurance for the uninsured. Instead, it would fundamentally transform the basic business model of medicine. With the right understanding of the industry, private-sector markets and bureaucratic rules, savvy investors could help underwrite innovative companies specifically designed to profit from the law. Billions could flow from Washington to Wall Street, indeed.

Scully, who has spent the last 30-some years oscillating between government and the private sector, is hoping to be his own best proof of the Obamacare gold mine. As a principal health policy adviser under President George H. W. Bush, he helped formulate many of those past Republican initiatives � like the shift to private-insurance programs � that Obamacare has put into law. Under George W. Bush, he ran the Centers for Medicare and Medicaid Services and oversaw a host of proto-Obamacare reforms, like Medicare Part D, which introduced competition into the government-supported health care market. After leaving C.M.S. in 2004, Scully began working simultaneously at Welsh, Carson, Anderson & Stowe, a leading health care private equity firm, and Alston & Bird, a law firm and health care lobbying organization. When the Affordable Care Act became law in 2010, he found himself in the rare position of being a lobbyist, private equity executive and former government health care official with access to a serious amount of capital. During the past three years, as other Republicans have tried to overturn Obamacare, Scully searched for a way to make a killing from it.

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