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HMOs Rally, Then Fall Back Down

The Senate Finance Committee has rejected a government run public insurance option-this was expected but there was worry in the past week that a public proposal may gain momentum after some Senate Democrats said a public component may be included.

What's next? Now the bill being pushed by Finance Committee Chairman Max Baucus comes up. Baucus' bill does NOT include a public component. Baucus wants to push his proposal through quickly, possibly by the end of the week.

So, HMO stocks rallied, then dropped back. What's the problem? We still do not know what a final bill will look like, and whether or not new taxes or burdensome obligations will be imposed on them. Absent that certainty, the best strategy is hold or lighten up. _____________________________

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