Health Care Stocks
Look out below! A comment from a staffer at the White House indicated that the administration was willing to give up on a public option for health care, still seeking healthcare reform, but would not seek the creation of a government owned insurance company.
The shift in tone comes after a terrible swing of momentum against health care reform as politicians from both parties feel it may be too expensive to operate, and may extend well beyond the $900 Billion in projected costs.
HUGE Implications for Health Care Industry
The change in tone and the change in direction over health care will have an absolutely monstrous impact on health care stocks. Would the bill have passed, analysts expected as many as 30 million people would flood hospitals, inciting demand from demographics previously excluded under the current system. This would have been an absolute boon for health care stocks, instead its proving to be a massive bust.
What do Credit Unions and Health Insurance Have in Common?
The question appears as irrelevant as they come. However, instead of seeking a public option for health care, a new proposal would effectively create not-for-profit health insurance companies. Similar to credit unions and the banking industry, these would be member owned, not too different from electricity or agriculture co-ops. The result is numerous insurance companies that by law should not show a profit, and will be in direct competition with the major players in health care.
Say Goodbye, Insurance Companies
I know personally the effect credit unions have on local banking. With one particular credit union, with a strong marketshare in my area, all banks, for profit and not for profit, are forced to compete. And although both must pay their workers, rent buildings, and carry about the same overhead, the credit union does not seek to derive a profit while the bank does! The banks simply can’t compete with the credit union’s rates either depositing or borrowing.
How to Play it
Should the bill pass with language including “not for profit insurers” there will be slippery slope shift from the number of people insured through private companies and those involved in the not for profit option. Assuming near equal business tact, the not for profit should be able to slowly steal customers on price alone, then again assuming it can better weight the actual risk of each insured person.
Right now you’re selling health care providers, namely for profit hospitals and nursing homes which have had an excellent run up in price which rode solely on the possibility of a public option. If the bill passes with “not for profit” insurers, you better dump every private health insurer out there. This could be big!
Health care and reform is now a hot topic, this health insurance forum is a good place for discussions.
