What Health Care Reform Means for Seniors Housing (CSA, HR, UHT)

The dust is finally beginning to settle in the great health care debate of 2009-2010. Individuals will have to have insurance. Employers -- one way or another -- will have to cover their employees. Insurance will be subsidized to make it affordable, and insurance companies will no longer be able to engage in their most deplorable practices. With more insured citizens, demand for care will rise. That's just simple economics. An estimated 37 million more people will be insured as a result of the law, and that means that the out-of-pocket cost for health care will fall for a large number of people, leading to a surge in health care consumption. One consequence of this will be an increase in demand for seniors housing, which is generally out of reach without the subsidy of insurance coverage. This idea was examined today by National Real Estate Investor. From an investor perspective, there's several ways to play this. One is with real estate investment trusts, which allow you to invest in real estate with the liquidity of a stock. Due to rising demand for health care, REITs that focus on medical facilities could boom once the laws major provisions take effect in 2013. Look to big health care REITs like Healthcare Realty HR, Cogdell Spencer CSA, Universal Health Realty Income Trust UHT. By their own structure, REITs have to pay out 90% of their taxable income to their shareholders, so their sky-high dividend yields often make them a favorite for income investors. With the expected growth of the sector due to health care reform on top of this, double-digit returns in the future are not hard to imagine. To be sure, it will likely be years before this growth is realized. Most of the health care bill does not go into effect until 2013. Moreover, the long-term care plan that seniors housing owners and operators foresee as the principal catalyst of their sector's growth requires a five-year vesting period before benefits can be distributed. But with REITs' historically high yield adding income to investors' portfolios in the meantime, now might be an attractive time to buy before their share prices take off. Learn how to find the best stocks to trade each day in our 70 page E-Book and 90 minute online video for free.