Reply #82: Today's headline: Insurers keep climbing as health vote nears on Capitol Hill

[mbperrin]

http://www.marketwatch.com/story/insurers-keep-climbing-as-key-vote-nears-2010-03-19?siteid=yhoof

Insurers keep climbing as health vote nears on Capitol Hill
By Russ Britt, MarketWatch
LOS ANGELES (MarketWatch) -- Shares of insurers kept climbing Friday as uncertainty over a health-care reform package nearing a key vote in Congress seemed to clear.

Virtually all the major insurers were up 2% or more in early trading, gaining in the face of a broadly lower U.S. stock market. Aetna Inc. (NYSE:AET) led the way, climbing 3.6%, followed closely by Cigna Corp. (NYSE:CI) , rising 2.8%.


Shares of UnitedHealth Group Inc. (NYSE:UNH) and WellPoint Inc. (NYSE:WLP) , the nation's two biggest insurers, climbed by well more than 2% and HealthNet Inc. (NYSE:HNT) neared the 2% level. The only company to make marginal gains was Humana Inc. (NYSE:HUM)

In a note to clients, Goldman Sachs analyst Matthew Borsch said the clouds over how health-care reform would fare in Congress have cleared now that the House has released its plans for a reconciliation bill designed to win passage through the Senate.

On Sunday, the House plans to try and pass the Senate's previously approved bill with a reconciliation measure that needs only a simple majority in the Senate. See related story on President Obama's final push to secure passage of health-care legislation.


"We believe the market reaction reflects, one, investor anticipation that health reform uncertainty will finally subside, and, two, that most of the reconciliation bill provisions were largely as expected," Borsch wrote in his note.

He added that there could be significant risks for the industry as new insurance exchanges to be set up under provisions of the legislation could bring about what he called "adverse selection." The planned elimination of medical underwriting will be coupled with a weak coverage mandate.

"However, the implementation timing leaves 3 1/2 years to work through -- and potentially modify -- provisions that might undermine successful coverage expansion," Borsch said.