Is Obama Backing Away From A Public Option?

Next week, President Obama will seek to boost flagging support for healthcare reform with a rare speech before a joint session of Congress on September 9^th.

According to White House senior adviser David Axelrod, Obama will address Congress because the health care debate has entered a new phase.

"Now we have to pull the final strands together and (it’s time to) get this done," Axelrod told reporters. "We’re at a different stage in this debate and (the president) will l be discussing where we are -- and what we have to do to get those final 10 yards to get this done."

At the heart of the issue is the growing backlash to the public option, which would allow every American to opt into a government run health plan – something similar to Medicare.

Officially, Obama still wants the "public option" on health insurance, which is favored by his liberal base. However reports earlier in the week on Politico.com suggest the White House may be about to abandon that aspect of reform.

“Aides said Obama does not plan to make a public option, or government plan, a make-or-break issue when he spells out his specifics,” writes the website.

The public option has been strongly opposed by the insurance industry, and many lawmakers doubt such an option could pass in the Senate, already unnerved by its nearly $1 trillion pricetag.

What’s the trade?

Although some companies will be hurt by health reform, says Citi analyst Charles Boorady, it seems investors are discounting something much worse than what's likely to happen to Aetna and UnitedHealth . I’d recommend long positions in both names with Aetna my favorite. I think AET has as much as 25% upside after the uncertainty ends.

The whole space concerns me because of the uncertainty, counters Steve Grasso. If some kind of reform goes through I think HMO stocks could plunge -- and quickly.

Both Guy Adami and Tim Seymour agree with Grasso.

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Trader disclosure: On Sept. 4, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (AGU), (C), (INTC), (MSFT), (BTU), (NUE), (GS); Grasso Owns (AAPL), (ABK), (ASTM), (BA), (BAC), (C), (COST), (CSCO), (PRST), (V), (WMT), (FAZ); Terranova Owns (AAPL), (QCOM), (EOG); Terranova Owns Gold Dec. Futures; Seymour Owns (AAPL), (BAC), (ETFC), (CHL), (VIP); Seygem Asset Management Is Short (FXI)

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