Trader Talk

Pisani: Analysts' About-Face on Health Bill?

Wall Street has done a bit of an about-face on health care reform in the past few weeks — while the Street for the most part is strongly opposed to the bill, analysts are increasingly pointing out potential positives in addition to negatives.

You can see this in the title of some of this morning's analyst reports. Cowen's title is: "Reconciliation Bill: Not So Bad"
Leerink Swann says "Time To Buy Managed Care Stocks (If You Haven't Already)."

The tenor of much of the commentary is that: 1) the bill increases access to health insurance, thereby increasing the number of insured, and 2) if passed, it will not impact the industry until 2014, so there are four years to look at fundamentals.

That's true, but there are still plenty of negatives. Here's a greatly simplified cheat sheet composite of what the Street is saying now.


Big Positive: larger number of insured

Negative: lower payments per member

Medicare Advantage stocks

Negative: facing funding cuts

Observation: universally viewed as the losers, but stocks not seeing a big selloff

Names: Humana , HealthSpring , Universal American


Positives: larger number of members; House bill includes Medicaid physician rate increases to Medicare levels in 2013 and 2014.

Names: Amerigroup , Molina , WellCare  


Positive: fewer uninsured

Negatives: Medicare cuts

Names: Tenet , Community Health , Universal Health  

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