The nine leading hospital company stocks are looking pretty bearish on their daily charts.
Reports and rumors in Washington late last week that the three large hospital associations are about to agree to give Congress and the Obama administration $150 billion in cost concessions over the next 10 years obviously have not been good for the hospital companies.
In addition, Sen. Max Baucus (D-MT) is looking for cuts in Medicare payments to hospitals and physicians.
And how many hospitals can run on California’s IOUs? Not only California, but most states are having budget problems because of Medicaid.
Then there are the confusing signals coming out of Washington about the prospects for the health insurance market reform legislation that’s going through Congress or is not going anywhere.
While last week it looked like the Democrats’ public option health plan, which I call a Government HMO (GHMO), was dead on arrival. Over the weekend, a couple of prominent Democrats promised that it is alive and kicking. I’ve seen talk that the public option would get only 38 votes in the Senate, but who knows?
The GHMO would solve hospital companies’ problems with uncompensated care and the 6 million to 8 million uninsured American citizens who aren’t eligible for existing government programs and can’t afford to buy any kind of health insurance because they’re permanently unemployable and chronically ill. But it wouldn’t solve the hospitals’ problems with 12 to 15 million uninsured illegal immigrants because they still would have to give them care without getting paid.
That unemployment rose last month to 9.5%, a 26-year high, also hurt hospital stocks, which almost always suffer during recessions.
Disclosure: I don’t have positions in any of these stocks.