HMO Investors and The New Health Plan
Update on HMO investors concerning new Health plan.
Many health industry analysts are blowing off President Barack Obama’s health care reform bill passed Monday. This reform is expected to yield a higher percentage of stocks because it is expected that government payments to privately run Medicare plans will be on the rise, according to one Lewis Krauskopf writer for Reuters.com website. Late Friday it was announced that, indeed, a higher-than-expected payment rate will be in effect for 2011. For this reason, health care share value for health insurance companies with heavy Medicare ties was elevated.
Can reform win approval in Congress?
Obama’s proposal is not the favorite bill amongst many middle and high class citizens who have to rely on short term loans online. Analyst actually expects the bill to fail. Sadly, these people haven’t had the experience of being too rich for state aid, but remaining too poor to afford health insurance. Wall Street was definitely paying close attention to any clues revealed during a bipartisan White House summit held Thursday. Realistically this reform will start off as a subtle change, but anything astronomical is unlikely. Mark the words of analyst Tim Nelson about how sooner or later a health care reform bill will be passed because the ones who advocate for the change simply won’t give up.
Humana Inc (HUM.N) and UnitedHealth Group Inc (UNH.N) are two of the biggest Medicare providers of the Advantage plans. Their stocks consequently increased 5.5 percent and 3.5 percent Monday. This includes the Morgan Stanley Health care Payor index, as well. HMO of health insurers was up 1.6 percent, according to Krauskopf.
Obama’s proposal comes after months of debate
This debate is nothing new to the Senate and House of Representatives; it has been amongst the most debated topics in congress for years.
Krauskopf states that:
“The proposal draws heavily from the reform bill passed by the Senate in December,” said analysts at Jefferies & Co. “We view the release of the President’s proposal as a relative non-event since it does very little in improving the chances of healthcare reform being legislated through bipartisan efforts in Congress.”
Discounted Health Insurer Stocks
When Wall Street first caught word of the proposed Health care reform bill that would threaten their future incomes, they panicked. To resolve any unnecessary losses, they decided to trade their health insurer shares at a discounted level. This panic subsided when democrats lost their majority vote in the senate last month. This reform will continue to stress out the stocks and its holders. According to Krauskopf:
“The stocks have underperformed since earlier this month when the Obama administration seized on premium increases by WellPoint Inc’s (WLP.N) Anthem Blue Cross unit in California to ratchet up attacks on the industry”.
Share holders must expect the unexpected in this case because it is a sure possibility that:
“Democrats will try to push reform measures through a budget process called reconciliation that requires a simple majority and could bypass Republicans” states Krauskopf.
Hopefully this issue is resolved soon so that the government can focus on something different for a change.
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