Health insurers’ stocks jump on news Obama will try to force ObamaCare on Americans
by Donald E. L. Johnson | 12:53 pm, February 22, 2010 | 4 Comments
Speculators apparently think that price controls would be good for health insurers. That's the message health insurance stocks are sending. They're up more than 1%. The idea is that if Obama nationalizes health insurance and health care, health insurers will make more money even though Obama and Pelosi would effectively run the companies for their own benefits. Or, it may be that speculators like Wellpoint's politically tone-deaf and self-destructing 39% increase in Anthem Blue Cross and Blue Shield premiums. Makes no sense to me.Category:
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Tags: Health insurance, Health Insurance Reform, Stocks, Stocks Medical > Syndicated
Tags: Health insurance, Health Insurance Reform, Stocks, Stocks Medical > Syndicated
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February 22nd, 2010 @ 2:03 pm
Could they be expecting increased revenue through more (required/forced) customers…?
February 22nd, 2010 @ 5:53 pm
Yes, Prospector, they could be expecting more revenue but they shouldn’t buy the stock based on an increase in revenue. This is because other provisions in the bill would make it impossible for insurers to make even their current 2% to 4% profit margins. Speculators may think the newly insured’s would by younger and lower risks than the currently insured. That would make them more profitable, except that ObamaCare is designed to make health insurance much more expensive. That would put pressure on politicians to tighten price controls to the point that the insurers would barely break even or would lose money.
February 22nd, 2010 @ 5:55 pm
Yes, Prospector, they could be expecting more revenue but they shouldn\’t buy the stock based on an increase in revenue. This is because other provisions in the bill would make it impossible for insurers to make even their current 2% to 4% profit margins. Speculators may think the newly insured\’s would by younger and lower risks than the currently insured. That would make them more profitable, except that ObamaCare is designed to make health insurance much more expensive. That would put pressure on politicians to tighten price controls to the point that the insurers would barely break even or would lose money.
February 22nd, 2010 @ 7:04 pm
It has been publicly stated that a goal and intended consequence of the “public option” is the elimination of the private insurance industry. Price controls along with mandated coverages can accomplish this.