The document discusses health care as a central issue in the 2012 US presidential election. It notes that Republicans argue the Affordable Care Act will increase costs and the deficit, while Democrats say benefits are already apparent and it will provide affordable care. A graphic shows health care is the second most important issue to voters after job creation. The rest of the document discusses the Supreme Court upholding the individual mandate and potential effects on different health care sectors.

1. Insights on Health
Care
July 2012 Vol. No. 1 Health Care Special Edition
Health Care, a Central Election Issue
in 2012
As soon as President Obama signed the Patient
Protection and Affordable Care Act into law in 2010,
critics and defenders of the legislation started a heated
debate, which continues throughout the 2012 election
season. Republicans like to point out the program’s
high cost and how it will likely increase the federal
deficit; Democrats argue that short-term benefits of
the law have already become apparent, and long-term
benefits will include affordable health care to all
Americans.
The image displays the percent of consumers who
ranked each issue as first, second, or third most
important factor in the 2012 presidential election.
With the unemployment rate at 8.2% as of April 2012,
it’s no wonder voters are primarily concerned with job
creation. Health care is the second most important
factor on the list.
Personal Note from Steve Stanganelli
My Core Values and value having a reliable Let’s make a plan together to
second opinion or need help improve your bottom line.
I strive to run my practice and my getting on track, then I look
life on the core principles best forward to being a part of your
summed up in Don Miguel Ruiz's team.
The Four Agreements:
I want to help you make sense of
Be Impeccable with Your Word your money.
Don't Take Anything Personally
Steve Stanganelli, MSF, CFP® Don't Make Assumptions Please call me and we can set up
Fee Only Planner & Tax Coach
Always Do Your Best a time for a no pressure chat to
steve@clearviewwealthadvisors.com explore the ways that we may be
978-388-0020 If you are like me and appreciate able to work together.
www.ClearViewWealthAdvisors.com this approach to life and business

2. Clear View Wealth Advisors LLC Health Care Special Edition July 2012 2
the beginning of the year because of favorable weather
Monthly Market Commentary conditions, growth has tapered off from March
through May. Fortunately, auto sales in June jumped
back up to 14 million units from 13.7 million in May,
which was 21% above last year’s tsunami-blighted
numbers, putting a stop to the downward trend.
Investors continued to monitor the situation in
Europe, as news on Spanish financials moved markets Housing: Housing data in June have been highly
both down (poor Spanish bank audits) and up optimistic, with uniformly positive pricing data, new
(support loans for Spanish banks). Up to this point, home constructions trending upwards, existing home
there is still no long-term remedy for European sales data driven up at least partially by a lack of
countries, with the expectation that they will continue quality inventory, and homebuilder-related financial
to struggle over the next several years under austerity data continuing to rise. Morningstar economists
programs, diminished growth prospects, and waning believe that the more predictive, earlier-in-the-cycle
confidence. data is stronger than the more concurrent data,
indicating more gains ahead. Furthermore, low rates,
While economic data in the U.S. were generally weak, falling inventories, and higher sales levels should lead
they were not weak enough to drive the Federal to better pricing results as well.
Reserve to introduce a new program. Instead, the Fed
merely extended Operation Twist until at least late Quarter-end insights: It has become more clear that
2014. Morningstar economists doubt that the program the U.S. is less dependent on exports than many other
will have much more than a symbolic effect on rates, countries (U.S. exports represented only 13% of GDP
given the already-low rates on long-term securities. according to 2010 data), and so a general slowing of
the world economy would not drastically affect the
Employment: June saw a disappointing 84,000 jobs U.S. economy. However, the U.S. economy is not the
being added, mostly from sluggish private sector job same as U.S. stocks, so S&P 500 companies that have
gains. While the economy actually added 815,000 substantial overseas exposure are still at risk. Stocks
jobs, 731,000 were subtracted because of the seasonal with lower overseas exposure, such as utilities,
adjustment factor. The good news is that in July, the communications, and health-care stocks, were among
seasonal adjustment factor will add, instead of the best performers in the second quarter. The relative
subtract, more than 100,000 jobs to the total number, U.S. strength showed up in country-level data as well,
so that’s something to look forward to. The with U.S. indexes down only 5% near the end of the
unemployment rate remained at 8.2%. second quarter, while both European and emerging-
market indexes were down 10-15% for the quarter.
Manufacturing: Manufacturing data in June fell Overall, consumers continued to spend, fueled
sharply, mainly from a massive drop in new orders. partially by falling gasoline prices. Unfortunately, low
This was the largest month-to-month decline since commodity prices were bad news for many basic
October 2001, and reversed 37 straight months of material companies, as prices for their goods dropped
positive growth readings. Morningstar economists while costs of production remained relatively high.
believe that many firms, faced with economic
uncertainty in both developed and emerging
economies, may have held back on new orders.
However, at this stage of the recovery, the U.S.
economy can tolerate some weakness in the
manufacturing sector since it only represents 11% of
overall employment. Month-to-month durable goods
orders jumped 1.1%, but this was not enough to offset
several previous months of decline. On a year-over-
year basis, growth has slowed materially, falling to
4.6% from 6.9% in the prior month.
Auto: Auto sales have been a key driver in the
economic recovery, and while they exploded upward in

3. Clear View Wealth Advisors LLC Health Care Special Edition July 2012 3
influx of newly insured patients into the health-care
Supreme Court Upholds Health-Care system may be a positive for the health-services
industry, while other components of the law, including
Mandate lower Medicare payments and greater oversight of
insurance premium increases, mostly mitigate such
benefits.
The U.S. Supreme Court upheld the individual
mandate in a narrow ruling last month, clearing the For the Big Pharma group, increased demand for
main hurdle for health-care reform known as the drugs as a direct result of the mandate may largely
Patient Protection and Affordable Care Act offset the increased fees and rebates associated with
(PPACA). While it is possible that the battle over the health-care reform. However, since costs related to
fate of the health-care law will now shift to the health-care reform are front-end loaded (which started
legislature, given the low probability of Republicans in 2010), and the increased demand may not likely
gaining a filibuster-proof majority in the Senate, begin until 2014 (when the mandate goes into effect),
Morningstar analysts believe the PPACA isn’t likely to investors' sentiment toward the drug group may
be repealed. improve as the tailwind of increased demand for drugs
begins to materialize in 2014. Generic drug
From the individual’s point of view, most Americans manufacturers may remain largely unaffected; most of
will see little impact. The majority of the country these companies have broad geographic operations and
receives health insurance through an employer, and generic drug pricing has been relatively unaffected by
those patients are unlikely to see changes. However, the law.
Americans who are uninsured or purchase insurance
on their own will see a significant change. Uninsured The device side was viewed largely as a relative loser
Americans will be forced to purchase minimum when the reform was passed. It is anticipated that the
coverage or pay a penalty ($95 in 2014, but projected additional insured in 2014 will not significantly
to increase to $695 by 2016, as per the Supreme contribute to volume because many devices are
Court’s official syllabus). The government will concentrated among Medicare recipients. For
implement tax credits for Americans with incomes up example, an estimated 90%-95% of pacemakers in the
to 400% of the Federal Poverty Level to help ensure U.S. are implanted in Medicare patients. With the law
that premiums are affordable. To facilitate the upheld, it also appears that the 2.3% medical device
purchase, each state will be required to establish an excise tax will stand.
insurance exchange which will make it easy to compare
insurance plans. Also, starting in 2014, insurance
companies will no longer be able to deny coverage to There may also be some side effects of the new
patients with preexisting conditions, and will only be legislation that many people will not be too happy
able to set insurance rates based on a limited number about. Health insurers may have to raise premiums,
of variables, including geographic location, tobacco and employers may have to reduce what they pay in
use, and age. wages and other benefits in order to continue covering
the cost of health care.
According to Morningstar analysts:
The opinions contained herein are provided solely for
informational purposes and do not constitute
For the managed-care sector, the ruling may be largely investment advice offered by Morningstar.
a positive, as alternatives were a lot more punitive,
particularly for firms operating in the individual
marketplace. On the other hand, MCOs (managed-
care organizations) may continue to face margin
pressure from regulatory scrutiny of premium
increases, minimum medical cost ratios, and cuts to
Medicare Advantage reimbursements.
The other group most affected by the ruling is health-
service providers, such as hospitals. The law's
reduction of uncompensated care combined with an

4. Clear View Wealth Advisors LLC Health Care Special Edition July 2012 4
an amount that you think, with some degree of
The Do-It-Yourself Health Savings certainty, you'll be able to use on health-care expenses
in the year ahead.
Account
Part 2: Supplemental Health-Care Account. Create a
separate pool of liquid assets to cover any additional
When deciding how much to set aside for an out-of-pocket costs that arise once you've exhausted
emergency fund, there is a growing category of your FSA funds. How large should the supplemental
expenses most people tend to overlook: potential out- health-care account be? Your company's out-of-pocket
of-pocket health-care costs. Even if you haven't opted maximum, less your FSA amount, may be a reasonable
for a high-deductible health-care plan, it's likely that amount if you can swing it. Unlike FSAs and the
your out-of-pocket health-care costs have jumped up health-savings accounts that can be used in
substantially in recent years. Not only have health-care conjunction with high-deductible health-care plans,
premiums increased dramatically, but so have the co- you can't put pre-tax money into your supplemental
payments and deductibles associated with many health health-care account. However, the money in your
-care plans. supplemental account won't have to be spent in a
single year. If you spend only a fraction of your
The magnitude of those numbers and the sobering supplemental account in year 1, you'd just need to top
statistics about the extent to which health-care costs it back up in year 2.
can derail household finances suggest that households
should make sure that their emergency funds include Those who aren't already funding Roth IRAs could
an allowance for health-care expenses that their plans experiment with holding their health-savings account
don't cover. within a Roth. The pluses: You can withdraw your
Roth IRA contributions at any time and for any
This is the idea behind flexible-spending accounts, reason without triggering taxes or a penalty, and if you
which enable you to set aside pre-tax dollars to pay for don't end up spending your contributions to cover
out-of-pocket costs not covered by your health-care health-care costs, you can withdraw the assets on a tax
plan. You can use an FSA to cover everything from co -free basis during retirement.
-payments to prescription expenses to health-care
costs that your plan did not pick up. Yet FSAs have an Finally, be sure to track your out-of-pocket expenses
important downside: If you don't use the assets you've for health care. If these costs exceed 7.5% of your
put in them, the money doesn't roll over to the next adjusted gross income, you can deduct the amount
year. Unless you're able to anticipate your out-of- over 7.5%.
pocket costs with some level of precision (for example,
you expect to be on a certain drug or see a certain
specialist for the foreseeable future), the use-it-or-lose Contributions to a Roth IRA are not tax-deductible,
-it risks of putting too much money into an FSA but funds grow tax-free, and can be withdrawn tax free
outweigh the benefits. if assets are held for five years. A 10% federal tax
penalty may apply for withdrawals prior to age 59 1/2.
Please consult with a financial or tax professional for
On the other hand, health-care savings accounts do advice specific to your situation.
allow you to roll over your money from year to year.
However, they're only available to participants in high
-deductible health-care plans, which have lower
premiums and higher deductibles than traditional
health plans.
Given these two types of accounts, a two-part health-
savings program, consisting of FSA assets plus
additional assets held outside the FSA, may be worth
considering. Such a two-part plan would work as
follows.
Part 1: Flexible Spending Account. Fund an FSA with

5. Clear View Wealth Advisors LLC Health Care Special Edition July 2012 5
The Health-Care Dilemma
As the 2012 election season unfolds, health care is a
subject of heated debate. The Supreme Court is
currently evaluating the Patient Protection and
Affordable Care Act that President Obama signed in
2010, and its decisions will impact millions of
Americans. Among other articles, the law requires
everyone to maintain minimal health-insurance
coverage or pay a penalty—a most disputed provision.
The image displays the percent of consumers who
have deferred care in 2011 because of cost, broken
down by type of insurance. Not surprisingly, uninsured
individuals were the most likely to defer care, and thus
potentially place even more strain on the system later
on. Perhaps mandatory health insurance for everybody
would not be such a bad idea, after all.
wide umbrella (such as nutrition, consumer health,
Big Pharma, Big Value animal health, pharmaceutical), recent break-up
announcements have allowed the market to better
analyze company valuations by individual segments.
Examples include Pfizer’s decision to divest its animal
health and nutritional businesses in July 2011, and
The pharmaceutical industry is changing before our Abbott’s plan to split into two distinct companies in
eyes, but not everyone sees the same thing. With 2012. Are these firms, as a whole, worth more than
change comes opportunity, and investors could be the sum of their parts?
poised to reap the reward of a shakeup among some of
the biggest drug makers in the world. An impending These recent changes present dislocation to the
patent cliff and potential business segment break-ups industry, but there may be an opportunity to profit
are among the biggest challenges facing from undervalued segments of the companies.
pharmaceutical companies. According to recent Morningstar analysis, big pharma
firms are currently trading at an average discount of
Patent Cliff: Over the next three years “big pharma” 12.9 percent (based on company stock prices and
companies (those with market capitalizations over $30 Morningstar fair value estimates of nine firms, as of
billion), will face a looming patent cliff. When a drug’s January 3, 2012). Morningstar analysts believe big
patent expires, competitors can replicate a similar pharma investors may be overreacting to the impact of
generic drug at cheaper prices, causing revenues to “fall expiring patents in 2012, and overlooking the
off a cliff.” Has the market accurately accounted for contribution of non-pharmaceutical business
this looming revenue drop, or overreacted? segments.
Break-Ups: While big pharma firms have historically
operated various business segments under one firm-

6. Clear View Wealth Advisors LLC Health Care Special Edition July 2012 6
Unfortunately, something went out of whack in his
This Will Only Hurt A Little Bit arm. From then on, our little Jack-in-the-Box was not
his usual self, holding his arm and wincing with pain
with each attempt to move it. So off we went to the
local ER.
Any parent can tell you that every day is an adventure. Now, in our case, there was not much to worry about.
And raising a toddler or two brings with it all sorts of After a quick examination, a nurse practitioner
new discoveries. Sometimes there's a new word, a new determined he had "nursemaid's elbow" and with a
song, a new insect or a new friend (sometimes they are few quick moves "popped" the bone into place with a
one in the same). For those with infants, we know minimum of fuss or crying.
that everything finds its way into your precious bundle
of joy's mouth ... except the food.
We didn't have to worry since we are covered by
employer-sponsored health insurance. The same may
Well, among these many discoveries is the inevitable now be said for nearly thirty million others who have
trip to the emergency room. For parents of little boys had no coverage and avoided care because of the added
it would seem to be a rite of passage. It can be worry about how to pay for it. With the most
frightening to both parent and child. expensive care system in the world, our companies
have been at a disadvantage with places that have
Well, we got through nearly three years without universal coverage. Now maybe we won't.
having to make the trip. But the night before
Independence Day, our Spencer was jumping between by Steve Stanganelli, CFP®, CRPC®
ottoman and sofa as little boys will despite parental
warnings. Short story: He landed wrong as we tried to
catch him before there was a head butt collision.
©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not
warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising
from any use of this information. Past performance is no guarantee of future results. "Morningstar" and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar Market
Commentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder.
Steve Stanganelli, MSF, CFP® Clear View Wealth Advisors LLC steve@clearviewwealthadvisors.com Tel:978-388-0020
Fee Only Planner & Tax Coach 12 Amidon Avenue www.ClearViewWealthAdvisors.com
Amesbury, Massachusetts 01913