Saturday, September 12, 2009
Whether or not President Barack Obama’s speech on Wednesday advanced the cause of health care reform, it did help the stock portfolios of health insurance companies. The Associated Press reported the following day that shares of many insurers went up after the president called for a refortified effort to improve the nation’s medical care. Stocks of UnitedHealth Group Inc. increased 17 cents (closing at $28.57), WellPoint Inc. gained 96 cents ($53.80), Aetna Inc. rose 59 cents ($29.84), and Humana Inc. jumped $1.12 ($39.19).
Analysts were left wondering why Wednesday’s televised address to Congress had this effect on health insurance investments. According Jefferies & Co. analyst Arthur I. Henderson, Obama’s speech signaled his willingness to back off on creating a government-run health insurance plan and, thus, removing the threat of competition for private industry. “While the President called for the creation of an insurance exchange and a public health insurance option, soothing liberal Democrat concerns, he downplayed the idea of the public option being a government takeover of the health care system as well as the impact on managed care providers,” Henderson told the Associated Press.
Meanwhile, health analyst R.J. Eskow saw things differently. He says the speech demonstrated the necessity to get coverage for the uninsured, and that outcome would mean more business for insurers. More business means a better investment for those playing the market.
-Noel Brinkerhoff
Sector Snap: Insurers Gain Ground After Speech (Associated Press)
Why Did Health Insurance Stocks Go UP After The President's Speech? (by R.J. Eskow, Huffington Post)
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