UPDATE: Managed-Care Stocks Off, Hospitals Up, On Health Bill
09 10월 2009 - 6:25AM
Dow Jones News
Managed-care stocks tumbled and hospital shares climbed Thursday
as an analysis of the Senate Finance Committee's health-reform bill
increased chances that the measure, which one analyst called
"onerous" for health insurers, will advance.
Contributing to the managed-care sell-off, apparently, were
House Speaker Nancy Pelosi's comments expressing interest in
exploring a windfall-profit tax on insurers to fund an expansion of
health coverage.
The nonpartisan Congressional Budget Office late Wednesday
predicted the latest version of the Senate Finance Committee bill
would cost $829 billion over 10 years, expand health insurance
coverage to most Americans and reduce the federal deficit. The
panel plans to vote on the bill early next week.
Wall Street analysts were skeptical about some of the CBO's
assumptions, and a health-insurance trade group, the Blue Cross and
Blue Shield Association, said the scorecard understated the bill's
"significant weakening" of a proposed mandate that every individual
become insured.
WellPoint Inc. (WLP), the largest managed-care company by
membership, closed down 6.2%, or $2.94, at $44.72. UnitedHealth
Group Inc. (UNH), the largest by revenue, Aetna Inc. (AET), Humana
Inc. (HUM) and Cigna Corp. (CI) traded down by approximately 3.6%
to more than 5%.
Hospital operators, expected to receive a boost from expansion
of health coverage to more patients, saw stocks rise. Tenet
Healthcare Corp. (THC) shares closed up nearly 5%, or 28 cents, at
$5.95, while Universal Health Services Inc. (UHS), Health
Management Associates Inc. (HMA), LifePoint Hospitals Inc. (LPNT)
and Community Health Systems Inc. (CYH) climbed roughly in the
2.4%-to-4.4% range.
The CBO score increases the probability that the bill could pass
the Senate with a filibuster-proof 60 votes, according to Wells
Fargo hospital analyst Gary Lieberman, who said the measure should
increase the percentage of insured individuals from 83% today to
94% in 2015.
Managed-care analysts disagreed with several aspects of the CBO
assessment and didn't like the look of the bill for health
insurers.
"We continue to view the ... bill as quite onerous for managed
care," Deutsche Bank's Scott Fidel said.
Analysts noted that the CBO assumed Medicare physician fees will
be cut by 25% next year, which they called unlikely.
"The CBO score matters more than whether the score itself is
realistic," Wells Fargo managed-care analyst Matt Perry said. "We
expect Republicans to attack the credibility of the score along
these lines, but we're skeptical that they'll gain much
traction."
The bill, assuming it passes, will have to be merged with a
measure from another Senate panel and reconciled with House
legislation.
The CBO doesn't seem to see a risk of significant adverse
selection - in which riskier or sicker people seek coverage - from
weakened provisions mandating individual coverage, Goldman Sachs
analyst Matthew Borsch said. "However, the CBO analysis does
nothing to allay our own concern over the adverse selection risk as
it may impact managed-care companies in the individual and
small-group insurance business."
Borsch said Congress could give final approval to health-care
overhaul legislation by mid-December.
The Blue Cross and Blue Shield Association, meanwhile, said
amendments made to the bill in the Senate Finance Committee
"eviscerated the individual mandate.... This is likely to result in
millions of people foregoing coverage. A weak mandate, as included
in the amended Senate Finance Committee bill, would encourage
people to wait until they are sick to purchase coverage. This will
drive up premiums for everyone."
The bill doesn't include a provision for a public health plan to
compete with private insurers, a proposal that the health insurance
industry has been fighting.
-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285;
dinah.brin@dowjones.com
(MarketWatch editor Laura Mandaro contributed to this
article.)