After months of rancor and vitriol the health care bill looks like it is on the way to passing (as I understand it the Senate needs to sign off on a couple of changes made by the house). According to this article from the AP via Yahoo the plan is targeted at 32 million Americans who lack health insurance but it is unlikely that 32 million is number of people that can't get health insurance. Some portion of the 32 million can afford it but choose not to get it.
Either way it is truly amazing that something initially conceived for about 10% of the population was put together and marketed in such a way as to be so divisive. The democrats seem to be relying an awful lot on projections that intuitively seem unreliable and the republicans believe this is pure socialism. We'll get an early indication come November and then we'll see how the economics play out in future years.
In general it seems that the investing community has not been in favor of the bill so its passing could be trigger a negative reaction of some sort in equity prices. I do not know how serious of a reaction there will be (maybe very little) but whatever the market does we have been through this before.
The health care bill is a big bad scary event that has created uncertainty. Well this has happened more times than most people can remember (do you remember the fear triggered by CEO having to sign off on their earnings back in 2002?) and will happen many more times in the future.
Based on past experience we can expect the market to this new news, digest it for some period of time and then revert to worrying (or not worrying as the case may be) everything else it has been worrying about. If the reaction is a fast decline, well fast declines often retrace quite quickly.
Of course there could be more of a meaningful impact on certain types of health care stocks. I've never held a hospital stock or a health insurance stock for clients and I think these areas would feel it most. Ultimately how and how much these companies are paid could be changed as could how we buy pills I suppose but if you need a pill you are still going to buy it one way or another.
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26 comments:
I suspect that my healthcare investments will go down before my healthcare costs do.
The bill is passed. Period. The only question is whether the Senate will accept the House's revisions. If they don't then the bill goes to the President's desk as is.
As to expectations, the reverse of Anon 6:03 conjecture is the longer term probability, but there is no hurry as a big hunk of this bill doesn't even kick into gear until 2014. Shorter term I suspect everyone will breath a sigh of relieve at the (probably temporary) reduction in hysteria.
AFAIK what happens immediately is that refusing coverage for a pre-existing condition or withdrawing coverage once someone is sick is now against the law. Not sure when subsidies for those who cannot afford insurance will kick in but assume it is well before the insurance market exchanges are implemented in 2014.
I disagree people will buy pills if not covered or not covered enough.
It depends on the pill. Some are nice to have pills or the pills effectiveness is questionable. Many are not life threatening issues.
They will be handled on a cases by case basis.
"Some portion of the 32 million can afford it but choose not to get it."
These people needed to be "helped" by taking away their rights and forcing them to buy health insurance.
Here is a chart comparing predicted health care program costs with actual costs ;->
http://www.john-goodman-blog.com/expenditures-for-health-programs-always-outpace-early-estimates/
Anyone that believes HC costs are going down is clueless. You can't add 30 million people to the roles and have costs go down like the democracts have been preaching. It will take a while, but this program will lead to rationing which is the only way HC cost will be slowed. JED
to Anonymous 11:23
The health insurance companies are currently rationing.
If you are very sick, it is difficult to get insurance; this is rationing.
Some procedures will not be covered by insurance, even if ordered by a physician; this is rationing
On another bright note it looks like some US borrowing costs are higher than AAA companies now. Wait until the Keynesian's really get us deep in debt it will be much, much worse.
It is rather unfortunate that we are choosing to leave a bankrupt country to our children.
Apparently these ten benefits become active within six months after the healthcare reform bill becomes law. Unfortunately I can't remember where I found this list so, as with anything unsourced, y'all may want to take it with a grain of salt:
1. Adult children may remain as dependents on their parents’ policy until their 27th birthday
2. Children under age 19 may not be excluded for pre-existing conditions
3. No more lifetime or annual caps on coverage
4. Free preventative care for all
5. Adults with pre-existing conditions may buy into a national high-risk pool until the exchanges come online. While these will not be cheap, they’re still better than total exclusion and get some benefit from a wider pool of insureds.
6. Small businesses will be entitled to a tax credit for 2009 and 2010, which could be as much as 50% of what they pay for employees’ health insurance.
7. The "donut hole" closes for Medicare patients, making prescription medications more affordable for seniors.
8. Requirement that all insurers must post their balance sheets on the Internet and fully disclose administrative costs, executive compensation packages, and benefit payments.
9. Authorizes early funding of community health centers in all 50 states to provide primary, dental and vision services based on a sliding scale for payment according to ability to pay.
10. No more rescissions - effective immediately you can't lose your insurance because you get sick.
Most make sense as stated except #4 - I suppose it might mean things like annual checkups are subsidized but that's just a guess. More will doubtless be revealed once all the dust has a chance to settle but it might take awhile to see clearly; I'm already seeing "urgent" mailers and tweets from both sides (to say nothing of ignorant screeds WRT Keynes and bankruptcy), striking for gold while emotions are high and trying to keep them that way.
Of course there are lots of benefits, but also there are a lot of negatives. Check this article http://forexcare.net/15-taxes-pay-health-care-bill/
All during the debate, proponents have said that insurance premiums will go down. If that happens, great. I'm not sure how that can happen when insurers are forced to accept more risk by insuring people who were previously uninsurable. As we all know here, there is rarely such thing as a free lunch.
Maybe insurance companies will eventually develop some sort of credit for people who live healthy lifestyles and charge those who don't more. Healthy lifestyle would of course be tricky to define. Grossly obese people due to laziness versus fit for example.
I wonder if tying the student loan program to the health care deal is a way to "nationalize" doctors of the future. The deal would go something like this: if you go to work for the federal government, we'll guarantee you a great salary, forgive your student loans, and exempt you from any and all liability as a federal employee.
Britain has a "good health practices" discount -- basically you get points for regular checkups, etc -- and France subsidizes medical education so doctors and nurses don't have those big loans to pay off.
I normally don't cross-post but I'll abstract a portion of a comment I left at Ritholtz's site after he posted on the number of other countries that already have implemented universal health coverage with some success viz
"...the peculiar thing [Barry] is that your list of countries w/ universal health care illustrates the fact that we had a real-world menu, a host of active programs with hard data, we could have selected from and instead we wind up concocting a stew that may prove barely edible."
You know, I don't want to add to the he said/she said crap about healthcare. And this isn't a healthcare blog. But I need to point out a major misunderstanding.
This: "You can't add 30 million people to the roles and have costs go down" is a major misunderstanding of current U.S. healthcare.
1. If you believe capitalism is the right thing, then you WANT 30 million more people enrolled in insurance. Because that allows insurance companies to spread their costs over 30 million MORE people. Will this actually help? We don't know - because we're a capitalist country. Those insurance companies are (rightly) more concerned about making money for shareholders.
2. One of the major problems (top 2 or 3, money-wise) is that Americans, both insured and uninsured, LOVE the emergency room. We wait until we're half dead, then go to the emergency room for care. This turns what could (should?) have been a normal doctor visit with a $25 copay into something that costs on average thousands of dollars. And if the person is uninsured, taxpayers bear part of that cost. If everyone is insured, and some significant percentage of those people go to doctors instead of the emergency room, you've got a large cost savings.
"ignorant screeds"
When you can not argue the facts because they do not support your position attack the other person or resort to name calling is a common tactic.
Q. What's the difference between ignorance and indifference?
A. I don't know and I don't care.
Okay, I agree, some folks might not consider an argument that supplied no evidence and no references yet asserted unidentified individuals labeled "Keynesians" are causing economic calamity and the future ruination of our children might not be considered an ignorant screed. Still, calling it that would not be an attack on the person making the argument (ad hominem), it would be an opinion about the quality of the argument itself. FWIW
Semi-OT but even though the market didn't react negatively to the passage of health reform -- health stocks and the $USD were up, oil down, etc -- and the US feels relatively secure (unless you're looking for work) the winds of international trouble do seem to be blowing stronger lately.
It seems to me that the EU failure to resolve the crisis in Greece is opening up some serious fissures and the increasing rhetorical heat between China and the US could hit front burner status if the US Treasury report identifies China as a currency manipulator. Don't think the global system is in nearly good enough shape to take anything like EU fracture or a major trade war in stride at this point so I've trimmed some positions I think may be more vulnerable to these possibilities.
"it would be an opinion about the quality of the argument itself. FWIW"
US government bonds being higher interest rate than AAA corporate bonds is a low quality argument???????
That was considered impossible in most economics text books.
Again continued derogatory comments continue instead of arguing facts.
The US is getting overly indebted which is a kin to bankruptcy for a country. Ask the Greeks.
"US government bonds being higher interest rate than AAA corporate bonds is a low quality argument???????"
Cut down on the number of question marks and give a link to the data: Where is the evidence that the spread between high quality corporates and T-bonds of comparable duration is negative?
I just looked and investment grade corporates are still yielding considerably more than comparable Treasuries so I have no idea where you're getting this from but, where ever it is, you may want to reconsider it as a data source.
RW there have been several articles today about AAA corps yielding less than treasuries. Seeking Alpha has an article right on the home page. Alphaville also mentioned this.
I'd guess he's getting the data from the same place that puts the U.S. in the same debt situation as Greece.
RW,
FWIW, I saw an article yesterday indicating some corporate debt is yielding less than treasuries.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYUeBnitz7nU
Probably isolated cases of super high credit quality. But, it could be the start of a trend.
Roger, I need a link. Couldn't find the Seeking Alpha article and doubt I would give it much credence if I had found it because my data sources, as usual unless I'm in a hurry and it doesn't matter much, are primary sources -- US Treasury, Federal Reserve (NY) and S&P mostly -- and they say that investment grade corporates are yielding more than treasuries so where is this stuff coming from?
Some punters are betting on a US debacle but that's just the usual gambling, it has nothing to do with credit market fundamentals.
RW here is a lead in from the SA home page;
Why would AA+ rated corporate bonds sell for a lower yield than AAA-rated U.S. Treasuries?
Do investors trust Warren Buffett’s financial management more than our Federal government? Or is the Buffett/T-bond spread a purely technical artifact of the yield curve and the carry trade?...
Links;
http://bit.ly/beg1gp
http://bit.ly/9axezq
I thought Alphaville is where i saw it as well but not there, maybe WSJ, not sure.
Obviously WH just left a link as well.
Ah, okay, got it: February 2-year Berkshire Hathaway bonds happen to sell for .035 points less than treasuries of similar maturity (but not duration) and we are supposed to extrapolate this data point to a broader trend and thereafter to a lesson that the bond market judges “it’s safer to lend to Warren Buffett than Barack Obama.”
I don't even know what to say to anyone who would take this sort of analysis seriously except to comment that I am impressed y'all have any money left and I am really looking forward to your trades on my desk.
ciao
RW,
Take it easy. You're the one who asked for a link. No need to insult anybody. Who said anything about trading?
WH, nice try, but this is not about "insulting anybody," this is about insulting intelligence and insulting the demands of due diligence which is the very stuff of successful investing and the very stuff that distinguishes authentic resources from those pandering garbage: None of the links provided except that to David Goldman's analysis at http://bit.ly/9axezq rise to the challenge of empiricism and verification, it is as simple as that.
I don't invest in smoke and mirrors myself but, in that vein, if no one intends to invest in what they argue or recommend here then what, precisely, is their raison d'etre vis-a-vis this or any other investment site? Hmmmm?
WH, nice try, but this is not about "insulting anybody," this is about insulting intelligence and insulting the demands of due diligence which is the very stuff of successful investing and the very stuff that distinguishes authentic resources from those pandering garbage: None of the links provided except that to David Goldman's analysis at http://bit.ly/9axezq rise to the challenge of empiricism and verification, it is as simple as that.
I don't invest in smoke and mirrors myself but, in that vein, if no one intends to invest in what they argue or recommend here then what, precisely, is their raison d'etre vis-a-vis this or any other investment site? Hmmmm?
Ah well, a double posting would normally seem appropriate at this juncture (if only to underscore the point) but I just watched Shawn Colvin singing "Shotgun Down The Avalanche" with Alison Krauss and realize I don't give a shit.
Once again, and finally, ciao (but if anyone does want to trade based on those other links, well ...heh, heh).
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