Tuesday was a good day for health insurance stocks.

Filed Under (Finance, Health Care) by Nolan Miller on Jan 20, 2010

Following up on a post from last month on the public option and health insurer stock prices, here’s a chart of the price of CIGNA, Aetna, WellPoint, Coventry Health, Humana and United Health (along with the DJIA and Nasdaq Composite Index) from Friday until now.   Due to the Martin Luther King Holiday there was no trading on Monday, which means that Tuesday morning was the market’s first chance to react to the series of reports over the weekend that Democrat Martha Coakley’s bid to take over Ted Kennedy’s seat in the Massachusetts special election on Tuesday appeared to be in trouble.  In fact, in the Tuesday special election Coakley was beaten by Republican Scott Brown who campaigned on a vow to oppose health care reform.  Due to the fact that Brown’s victory will result in only 59 Senators in the Democratic camp, preventing them from defeating Republican filibuster tactics, the media has speculated that Brown’s victory will spell the end of health reform.

tuesday

(Source: Google Finance.  Click here to make your own graph.  The original idea came from the Huffington Post, here.)

The impact on stock prices is striking.  See the two flat curves hovering around zero?  They are the DJIA and Nasdaq Composite Index.  The other lines (the ones that jumped up Tuesday morning) are the major insurers CIGNA, Aetna, WellPoint, Coventry Health, Humana and United Health.  As to what this means for the prospects of health reform (and what health reform means for insurers), I think the graph speaks for itself.

By the way, Coakley, Brown and their families kept robo-calling me over the weekend despite the fact that I don’t live in Massachusetts anymore.  I hope they figure that out before this seat comes up again in 2012!

The Public Option and Stock Prices

Filed Under (Health Care) by Nolan Miller on Dec 24, 2009

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.

http://www.huffingtonpost.com/2009/12/21/seeing-public-subsidy-not_n_399733.html

Happy holidays to all.