“Healthcare shares rise as reform bill progresses”
http://www.reuters.com/article/idUSTRE5BK2... “The S&P Healthcare Index rose 1.4 percent, while the Morgan Stanley Healthcare Payor stock index rose 3.6 percent. The S&P Managed Health Care index rose 4.6 percent.”
“’All in all, relative to the last version of health reform issued by the Senate, things have turned out pretty well for the health insurance industry,’ said Carl McDonald, an analyst at Oppenheimer. ‘In particular, all versions of a government-run health plan have largely been eliminated.’”
“The original Senate bill taxed the health insurance industry a fixed $6.7 billion a year. Under the new proposal, the industry would face a $2 billion tax in 2011, with increases over time to $10 billion in 2017.”
Me: Let’s do the numbers here. The original proposal called for taxing the industry as a whole $6.7 billion a year for 10 years. That would have been $67 billion over that period. The health care reform bill was changed in this way, with new proposal totals $10 billion, meaning the industry was saved $57 billion in this deal.
“The bill would require most Americans to have insurance, expanding the membership rolls for health insurers. At the same time, it replaces a proposed government-run public insurance option with less onerous exchanges to cover those who are not covered through their employment.”
“Matthew Borsch, an analyst at Goldman Sachs & Co., said Cigna Corp remains his favorite among health insurers.”
“’Aside from reform, the important backdrop to our sector view is fundamentals, which are decidedly mixed but with the key being that downside risk to commercial margins is mitigated by firming of industry pricing,’ he said in a research note.”
Me: the money phrase in this is “firming of industry pricing,” which really means the industry can still continue to collude to fix premium prices and keep them artificially high since they will keep the anti-trust exemption that only insurance and major league baseball have. (note that the removal of this exemption was in the bill but was taken out) There’s a business case for MLB; the only case for the insurance industry is sheer greed.
“Shares of Cigna rose 5.3 percent to $37.69. Shares of Aetna Inc rose 5.84 percent to $34.41. Humana Inc rose 3.79 percent to $45.17 and United Health Group Inc rose 5 percent to $33.14. Shares of Wellpoint Inc rose 3.8 percent to $60.51.”
“Shares of pharmacy benefit managers Medco Health Solutions Inc rose 3.84 percent to $65.51 and Express Scripts rose 5.2 percent to $88.77 as concern eased that an industry tax could be added to the bill in the final days leading up to the vote.”
“Here's a breakdown of major health insurance company stock performance from Oct. 27 to Friday's market close:”
* Coventry Health Care, Inc. is up 31.6%
* CIGNA Corp. is up 29.1%
* Aetna Inc. is up 27.1%
* WellPoint, Inc. is up 26.6%
* UnitedHealth Group Inc. is up 20.5%
* And Humana Inc. is up 13.6%
Me: This past Friday’s market close is important because that’s when the bill in its current form became known as what the Senate would be voting on. These gains are indications that, far from being "reform," what the new bill does is reward the industry, while allowing them to avoid regulation that would promote competition and fairness in pricing.
Want an example of why senators who are democrats, the so-called “party of the people” (what a laugh!) are against something, i.e. health care reform, that they should be for? Feast your eyes:
“Just to put this boon to health insurance stocks in perspective: according an Indianapolis Star article from June, (democratic senator)Evan Bayh's wife, Susan, "owns from $500,001 to $1 million in employee stock in WellPoint, the Indianapolis-based insurance giant on whose board she sits." That would mean that the value of her personal holdings in that one health insurance company alone, in the last six weeks alone (since Lieberman and her husband began menacing the public option), would have increased by a value of between $125,000 and $250,000. As part of the bonanza of health care industry board positions she magically received since her husband became a Senator, Susan Bayh is given a quarter-million dollars each year in stocks and stock options from Wellpoint.”
So of course, Bayh and Lieberman will hardly vote to deprive their respective beloveds of the loot that they stand to gain if they can successfully gut reform.
Let me close with this: ANYTIME there is legislation that is in the process, if you want to know what is going on and the likely outcome, don’t listen to the feel-good happy talk. That’s for the rubes. If you really want to know, then FOLLOW THE MONEY!
And we should want to know, because at this point its not about us, but about the little angels. Its they we need to protect.
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Tuesday, December 22nd 2009 at 12:20PM
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