The stock market as predictor of health reform
November 18, 2009Jon Brooks Comments OffNate Silver of the political polling site FiveThirtyEight suggests the performance of health insurance stocks might be one way to neutrally evaluate the chance of health care reform’s success:
It’s a bit hard to assess where we are in the health care debate. On the one hand, the (House) Democrats pushed through and passed a bill…clearing a hurdle that meaningful health care reform has never before cleared. On the other hand, the vote in the House was perilously close, there were new complications introduced by the Stupak amendment, and the bad jobs numbers and arguably the outcomes of the elections last Tuesday Virginia and New Jersey last will give nervous lawmakers plenty to worry about.
One leading indicator of the prospects for health care reform so far has been the performance of the half-dozen or so publicly-traded health insurance company stocks. Favorable developments for health care reform have been met with decreases in the prices of these stocks, and unfavorable developments with improved valuations….
I don’t necessarily think that the stock market is particularly adept at forecasting political risk, but to the extent that you’re looking for an objective assessment of the consequences of (the) results for the Democratic agenda, this is a pretty decent one.
If you’re interested in keeping a running tab on the share prices of Big Healthcare (Aetna, UnitedHealth, Cigna, Wellpoint, Humana) you can do so at Yahoo! Finance, using this link. (By the way, the share prices of all these companies have increased over the past month.)
