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TheStreet Open House

Health Care Reform Is Healthy

Stocks in this article: IHFVHTIHI

NEW YORK ( TheStreet) -- President Obama is putting pressure on Congress to finalize health care reform legislation before the end of the year, and this is likely to make the health care and medical sectors even more compelling.

The sector has been attractive to investors because of several factors: The elderly population is growing; there has been an increase in diseases and cancer rates; and Americans generally want to live longer and healthier lives. In addition, health care companies have seen continuous year-over-year revenue growth.

The proposed reform is expected to further accentuate the sector's appeal by increasing accessibility to prescription drugs and turning tens of millions of previously uninsured people to into health care customers.

You'd think that those affiliated with the industry would be smiling from ear to ear, but they're not. Opponents of the legislation are against the idea of a government-run insurance program, and drug makers are upset over the billions of dollars in rebates they will have to fork over to the government over the next decade. Additionally, medical device providers are upset because they will be forced to pay a 2.5% tax to the government on all of their products.

At the end of the day though, there is hope for the sector, in particular drug makers and hospitals. Lobbyists for Big Pharma have managed to include an $80 billion rebate agreement in the reform, while also successfully winning a fight that would have required some of its largest players to pay back another $106 billion in additional rebates over 10 years.

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