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March 24, 2021

What will U.S. health care reform mean for Cdn. economy?

We try to steer clear of politics as much as possible in this space, but there’s a movement happening now that’s quite tough to ignore.

As you know, Barack Obama signed legislation yesterday that will greatly overhaul a heavily-criticized U.S. health care system.

And while that’s great news for millions of Americans – despite being a thorn in the side to some 100 million Republicans – could it have positive effects for Canadians here north of the border?

The thinking goes, with a commitment to publicly fund Americans’ health care needs in place, millions of would-be uncovered Yankees will now have the confidence (or is it ‘won’t have the fear?’) to treat their finances rationally without bracing for a medical bombshell that’d wipe out their savings.

For instance, let’s say Family X didn’t have health coverage and kept a $20,000 fund stashed away if grandma got sick or junior developed asthma or whatever. In theory, now, that’s $20,000 more that can be pumped into the U.S. economy over a variety of ways.

That’s not much, but multiply such cash over the estimated 32 million Americans who haven't had coverage and that’s a considerable boom.

What’s this mean for Canadians? Well, many pundits – like the Financial Post’s Diane Francis – chalk this up as nothing but “good news” for countries like ours that depend on a thriving United States for our own success.

According to Francis, another big boost to the U.S. economy will come from the 3% of the country’s GDP currently used for litigation to decide whether to cover medical bills. With much of the red tape removed on that front, that’s money that can be spent toward, say, subsidizing businesses with grants to keep them manufacturing on North American soil.

It’ll take a while for Canadians to feel the real economic effects of U.S. health reform, but some enhancements have come soon, at least.

TSX health care stocks are already up following the new U.S. legislation, according to the Montreal Gazette.

“People perceive there’s going to be a whole lot more public money coming into health care, so that could be good for a number of different companies that provide either equipment or services or whatever,” a financial insider told the paper.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...