Health Plan Stocks, Ted Kennedy and Healthcare Reform

By Bob O'Brien

They are still at it, and even during the passing of one of the U.S.’s most famous and legendary Senator’s, the healthcare debate has taken appeared to have taken new angles. I write as an investor and not as a policy maker or political analyst. It is not my goal to debate the political implications of anything, but the implications as an investor and/or trader. I can’t help but notice how the healthcare debate tide is turning once again.

It is turning in favor of more government intervention which leads to smaller profits for Healthcare companies like Aetna (AET), United Health Group (UNH), and Well Point (WLP).

Here is a chart for Aetna which is pretty good proxy for the Healthcare trade and the stock appears to have peaked and could test its lows of mid-June.

Ted Kennedy has been a champion for the side of Universal Healthcare for years, and you can’t under-estimate how a man’s passing can inspire others to carry out their lifelong goals. In fact when Lyndon Johnson took the Presidency after the assassination of John F Kennedy, many people could hardly recognize him anymore. He became completely dedicated to John F. Kennedy’s lifetime goals.

Regardless of anyone’s legacy, the Healthcare debate for the Democrats goes on and as long as they have super majority the cause will endure and their dream will never die. The debate definitely seems to have evolved to a place where the Republicans have become more defensive and I have noticed more and more of them saying that they are for healthcare reform.

If the Democrats can get united behind something like co-ops or any other major reform, and pick off a couple of Republicans along the way, you will probably see some of these healthcare stocks go below their mid-June lows.

Original article

Comments

[YoYoMama:]

Your article is completely contradictory. You state from the outset that this article is not about politics. You then go on to post a tiny paragraph of stock recommendations, post a few charts, then spend the body of your article (3 out of 5 paragraphs) talking about Democrats and Republicans.

Let's not be intellectually dishonest. If we are going to talk about health care reform, it will be political in nature. Stocks take a backseat. Next time, just be more honest from the outset.

Sep 01 09:50 AM

[gurumanjohn:]

I actually don't buy your doom analysis for the major health plan stocks. If health reform happens, it could be a very good thing for the major carriers. Even without their political clout ( and we all know it's very strong) expanding the reach of health insurance under any of the major plans on the table will expand the major carriers' market universe by anywhere between 20 and 40 million lives. Even at a lower margin, this will increase profits substantially. In fact, United's strategic plan is betting on this outcome. What if they enact a "public" plan you say? Even better. The chance of the government administering this "public" plan itself is extremely remote. They will hire at least two or three of the major carriers to administer it for them on an ASO (administrative services only) basis. So I believe you should moderate your doomsday analysis in the long term.

Sep 01 04:15 PM

[myWealth.com:]

YoYoMama,

I appreciate your comment, but I can't hekp but think that you are projecting.

I wish you well!!

Bob


On Sep 01 09:50 AM YoYoMama wrote:

> Your article is completely contradictory. You state from the outset
> that this article is not about politics. You then go on to post a
> tiny paragraph of stock recommendations, post a few charts, then
> spend the body of your article (3 out of 5 paragraphs) talking about
> Democrats and Republicans.
>
> Let's not be intellectually dishonest. If we are going to talk about
> health care reform, it will be political in nature. Stocks take a
> backseat. Next time, just be more honest from the outset.

Sep 01 10:05 PM

[myWealth.com:]

Guru,

Thanks for your comment, but this is exactly what the Health Insurers want people to think. I am not buying it, but the devil will be in the details.

Bob

On Sep 01 04:15 PM gurumanjohn wrote:

> I actually don't buy your doom analysis for the major health plan
> stocks. If health reform happens, it could be a very good thing for
> the major carriers. Even without their political clout ( and we all
> know it's very strong) expanding the reach of health insurance under
> any of the major plans on the table will expand the major carriers'
> market universe by anywhere between 20 and 40 million lives. Even
> at a lower margin, this will increase profits substantially. In fact,
> United's strategic plan is betting on this outcome. What if they
> enact a "public" plan you say? Even better. The chance of the government
> administering this "public" plan itself is extremely remote. They
> will hire at least two or three of the major carriers to administer
> it for them on an ASO (administrative services only) basis. So I
> believe you should moderate your doomsday analysis in the long term.

Sep 01 10:08 PM

[Dan Jacome:]

his death likely catalyzes hardcore dems to get something passed this year. Interesting action will be how he gets replaced--and when. With his death, dems are 1 vote short of filibuster (59 vs 60 votes).

Sep 02 02:38 AM

[YoYoMama:]

Projecting what? My comments are not about politics, but about you.

On Sep 01 10:05 PM myWealth.com wrote:

> YoYoMama,
>
> I appreciate your comment, but I can't hekp but think that you are
> projecting.
>
> I wish you well!!
>
> Bob

Sep 02 10:20 AM

[Tigerlily468:]

Let's face facts. This kind of healthcare doesn't work. Never has, never will. My daughter is on Mass Health. She got on it while we had insurance from my husband's work. How'd that happened? She got arrested for underage drinking a couple of times. They gave her community service but she couldn't do it (she had agoraphobia...which matters nothing to the courts) causing charges to keep piling up; so she ended up in juvenile detention. Next thing we know the judge tells us we should make her a ward of the state (against our wishes) and we have to take her off our insurance and put her on Mass Health (we had younger children and were threatened that they would be taken away if we didn't do what they wanted) We complied. LOL, WE COMPLIED. When this all started she was sixteen with good teeth and healthy. Since MASS Health, guess what? While incarcerated she had an abcessed tooth so I said, you need a root canal, but NO. Mass Health only allowed her tooth to be pulled. By the time she was 18 she lost 2 teeth that very well could have been saved...but she was on MASS Health! Further, she has had numerous infections from being in a public lock down facility that does nothing to provide a safe and healthy environment, also provided by the state of Massachusetts.... Because of her agoraphobia they put her in programs. One psychiatrist called me begging me to take her off Mass Health so she could get the care she needed. He said Mass Health will not help her. He was right. I rue the day I allowed the state of Massachusetts to interfer with my daughter's life. If you all think you will be better off with gov't supplied insurance...well, then you're wrong. You will pay through the nose and be treated like an animal, or worse, in my opinion. I take better care of my animals than this state does their health recipients. If you don't believe me, move here...oh, wait, you can't afford to since you'd have to pay an arm and a leg for welfare, insurance, etc...

Sep 16 08:48 PM