The Public Option and Stock Prices

Posted by Nolan Miller on Dec 24, 2009

Filed Under (Health Care)

I assume that everyone has better things to do than read this blog over the holidays.  But, cyber-space is forever, so I thought I’d post anyway.  Here’s an interesting piece from the Huffington Post (sent to me by Dan Karney — thanks, Dan!) that traces the stock prices of health insurers since Joe Lieberman laid siege to the Senate bill on October 27, threatening to support a filibuster unless the public option were removed.

As a health economist, I’m pretty unsure about what the public option will do.  But, the market seems pretty clear in its expectations.  Basically, the stock of major health insurers such as Coventry, CIGNA, Aetna, WellPoint, UnitedHealth and Humana went up anywhere from 13 to 31 percent between October 27 and December 18, relative to a 2.3 percent increase in the DJIA.  Now, this isn’t all due to the Lieberman threat and the possible removal of the public option.  Some of this may be due to increased skepticism about the likely passage of any bill at all or other changes in the legislation that were introduced during this time.  But, it certainly appears that developments over the last month and a half have been interpreted as good for insurance companies.

Here’s the link.

Happy holidays to all.