Tuesday, December 22, 2009

Stock Price Dramatics

Glenn Greenwald, who usually makes very valid arguments and whom I take very seriously, is posting today about the rise in stock prices of health insurance companies and linking that to the lack of a “public option” in the ”health care reform” bill that is making its way through the Senate.

While I don’t really have any disagreement with any point that he is making, in fact agree with quite a lot what he is saying, I can’t really get as excited as he seems to be about the rise in stock values or their significance. He seems to think that it signals that insurance companies believe that they have won something and that some sort of halcyon period is in their future, but as I look at present and past stock prices for all of the major health insurance companies I really can’t draw that conclusion.

Stock prices in that industry went in the tank just about the time this debate started and, while this increase is starting to bring them upward, they are still quite a long way below where they were at the beginning of 2008. I see this as more a case that the industry has been getting beaten up for the past year and investors are now beginning to think that it might survive the best efforts of the more liberal reformers to put it out of business.

Certainly the health insurance companies receive a mandate for new customers, but they also get saddled with new regulations for payments of benefits. I don’t know how those two factors are going to balance out, and I don’t think anybody else can do more than make guesses at it, but I see this stock price thing as more of a sigh of relief than I do a cheer of victory.

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