Shocking news, just shocking.
I should just say "well, duh".
While I don't think that the information below will come as a huge surprise to most of you, I do enjoy seeing it spelled out in black and white.
Thanks to Ezra Klein (super sleuth) there is a link to the entire report, but the bottom line as I read it is:
Wellpoint = good stock if health care fails.
I'm no stockbroker but I say "SELL".
"Of course, healthcare reform is a double-edged sword for Wellpoint shares. Should reform fail, Wellpoint would be a primary beneficiary."
http://voices.washingtonpost.com/...
That comes from the first page of the Cowen Co.'s assessment (pdf) of Wellpoint stock in 2010 and beyond. The argument is simple: Wellpoint's business model is uncommonly concentrated in the individual and small-group markets. Those are the exact markets that health-care reform will drastically change. Those are the markets where people get rejected for preexisting conditions, where insurers spend 30 cents of every premium dollar on administration and where rate hikes are volatile and constant. Health-care reform wants to change all of that, and if it does, Wellpoint's business model will be changed, too.
Wellpoint's "2.2 million individual members do leave it somewhat exposed to the 80% individual [Medical Loss Ration] floor contemplated in the Senate bill and Federal oversight of rating action proposed by the President," continues the analysis. In English, that means the bill will force Wellpoint to spend at least 80 cents of every premium dollar on medical care for its customers, and it means that regulators aren't likely to let Wellpoint jack prices up by 25 percent with no warning or reason. It also means that Wellpoint is not spending that much of premiums on medical care and is not keeping its rates under control now. (It's possible that "rating" is referring to regulations on things like age discrimination and preexisting conditions in this context. It's not clear from the writing, but it doesn't change the point: The bill regulates those practices, too.)
Cowen Company Assessment (pdf)
And from TPM we have this:
http://tpmdc.talkingpointsmemo.com/...
President Obama and Health and Human Services Secretary Kathleen Sebelius today summoned the nation's four largest health insurers responsible for rate increases the administration calls "jaw-dropping." They demanded the insurers - WellPoint, Cigna, Aetna and United Health Group - start disclosing their rate increases on the Internet.
Everyone involved called the talks "constructive," but shortly after the meeting a report surfaced showing the nation's largest insurer would stand to profit substantially if reform fails.
Should you wish to check your gag reflexes, read this blockquote.
WellPoint CEO Angela Braly told reporters on a conference call that she told Obama the rapid rise in health care costs is a problem and her company often is the "bearer of bad news in form of rate increases."
If granted three wishes, my first wish would be to be chosen to tell Wellpoint CEO, Angela baby that sometimes the American people have to be the "bearer of bad news" to her stock.