Tilted
03-26-2010, 08:56 PM
companies. That was the essence of the message that was repeated over and over by supporters of the recently passed health care bill during the final hours of debate over it on the floor of the House chamber. It's also the way that President Obama and others tried to characterize their reform efforts, both before and after passage of the Patient Protection and Affordable Care Act.
So, what of these evil health insurance companies that have been threatened for so long with this 'reform', which promises to limit their ability to take advantage of ordinary, hard working Americans? What do they think about this legislation which will, ostensibly, benefit the American public at their expense - which is certain to subordinate their interests to those of the American people?
Well, I follow economic markets, to include equity markets, a little more closely than the average person, so I've seen on a real-time basis how health insurance stocks have responded to the evolving health care reform discussion - and I've no doubt what the markets, and investors, think about this reform with regard to how it is likely to affect the fate and profits of health insurance companies. However, quantifying those sentiments in a simple and demonstrative way is not necessarily easy, especially if any reasonable level of precision is sought.
That said, I offer these crude market realities for people to make of them what they will. Using the market close of November 6th as a starting point (*), and today's market close as an ending point, the DJIA has seen a gain of 8.3%, the S&P Index has seen a gain of 9.1%, and the Nasdaq Composite has seen a gain of 13.4%. Over that same period, the 10 largest publicly traded health insurance companies, by market cap (**), have seen an average gain of 19.2%. In the aggregate, weighted for market cap, they've gained about 16%.
I can't speak with meaningful certainty about how the American people, in the aggregate, think this reform will affect them - as being a positive or a negative. I suspect there's a wide range of views that add up to a fairly neutral outlook at best. However, it's pretty clear what the health insurers - and, in general, money managers - think about its likely affect on the health insurance industry. The pundits and advocates may have a case if they want to assert that this reform will be of net benefit to America. But, as for choosing American people OVER insurance companies - MY ASS!
(*) I chose November 6th because that was the last trading day before the House's vote on its original health care reform bill, which I believe was the first full chamber vote on such a bill. There are lots of dates that could be picked, but I suspect any reasonably selected date (i.e. one that is not specifically chosen because it might create a distorted impression of how the health care conversation affected health insurance company stocks) would lead to similar results. Frankly, the health insurers had seen a fair little run up going into November 6th, so using that date actually tends to under represent the performance of those stocks relative to the equity markets as a whole.
(**) I'd guess they make up around 90% of the private health insurance market in the U.S.
So, what of these evil health insurance companies that have been threatened for so long with this 'reform', which promises to limit their ability to take advantage of ordinary, hard working Americans? What do they think about this legislation which will, ostensibly, benefit the American public at their expense - which is certain to subordinate their interests to those of the American people?
Well, I follow economic markets, to include equity markets, a little more closely than the average person, so I've seen on a real-time basis how health insurance stocks have responded to the evolving health care reform discussion - and I've no doubt what the markets, and investors, think about this reform with regard to how it is likely to affect the fate and profits of health insurance companies. However, quantifying those sentiments in a simple and demonstrative way is not necessarily easy, especially if any reasonable level of precision is sought.
That said, I offer these crude market realities for people to make of them what they will. Using the market close of November 6th as a starting point (*), and today's market close as an ending point, the DJIA has seen a gain of 8.3%, the S&P Index has seen a gain of 9.1%, and the Nasdaq Composite has seen a gain of 13.4%. Over that same period, the 10 largest publicly traded health insurance companies, by market cap (**), have seen an average gain of 19.2%. In the aggregate, weighted for market cap, they've gained about 16%.
I can't speak with meaningful certainty about how the American people, in the aggregate, think this reform will affect them - as being a positive or a negative. I suspect there's a wide range of views that add up to a fairly neutral outlook at best. However, it's pretty clear what the health insurers - and, in general, money managers - think about its likely affect on the health insurance industry. The pundits and advocates may have a case if they want to assert that this reform will be of net benefit to America. But, as for choosing American people OVER insurance companies - MY ASS!
(*) I chose November 6th because that was the last trading day before the House's vote on its original health care reform bill, which I believe was the first full chamber vote on such a bill. There are lots of dates that could be picked, but I suspect any reasonably selected date (i.e. one that is not specifically chosen because it might create a distorted impression of how the health care conversation affected health insurance company stocks) would lead to similar results. Frankly, the health insurers had seen a fair little run up going into November 6th, so using that date actually tends to under represent the performance of those stocks relative to the equity markets as a whole.
(**) I'd guess they make up around 90% of the private health insurance market in the U.S.