Healthcare industry stocks explode as bill progresses

The president claims Democrats "stood up to special interests," as they get very rich on "reform"

Published December 22, 2009 11:23AM (EST)

(updated below - Update II - Update III)

The Senate passed its health care bill "by standing up to the special interests who prevented reform for decades and who are furiously lobbying against it now" -- Barack Obama, December 21, 2009.


"'Healthcare shares rose on Monday as a bill to reform healthcare passed the first critical test in the Senate . . . Shares of Cigna rose 5.3 percent to $37.69. Shares of Aetna Inc rose 5.84 percent to $34.41. Humana Inc rose 3.79 percent to $45.17 and United Health Group Inc rose 5 percent to $33.14. Shares of Wellpoint Inc rose 3.8 percent to $60.51" -- Reuters, yesterday, with this ironic headline:  "Healthcare shares rise as reform bill progresses".


"Investors are seeing the Senate's version of health care reform as a massive public subsidy for insurance companies -- and as a result, are sending the sector's stock prices shooting up, up, up. . . . Stripped of a government-run insurance plan, the bill would give tens of millions of Americans no option but to start paying hefty premiums to private companies.

The rise in stock prices has been particularly striking in the period since Sen. Joe Lieberman (I-Conn.) said on October 27 that he would filibuster a Senate health care reform bill if it included a public option . . . Here's a quick breakdown of major health insurance company stock performance from Oct. 27 to Friday's market close:

* Coventry Health Care, Inc. is up 31.6 percent;

* CIGNA Corp. is up 29.1 percent;

* Aetna Inc. is up 27.1 percent;

* WellPoint, Inc. is up 26.6 percent;

* UnitedHealth Group Inc. is up 20.5 percent;

* And Humana Inc. is up 13.6 percent" -- Shahien Nasiripour, The Huffington Post's business reporter, yesterday.


Just to put this boon to health insurance stocks in perspective:  according an Indianapolis Star article from June, Evan Bayh's wife, Susan, "owns from $500,001 to $1 million in employee stock in WellPoint, the Indianapolis-based insurance giant on whose board she sits."  That would mean that the value of her personal holdings in that one health insurance company alone, in the last six weeks alone (since Lieberman and her husband began menacing the public option), would have increased by a value of between $125,000 and $250,000.  As part of the bonanza of health care industry board positions she magically received since her husband became a Senator, Susan Bayh is given a quarter-million dollars each year in stocks and stock options from Wellpoint.  That's just a microcosm for considering how well Obama's so-called "special interests" have done as a result of this health care bill.

One should acknowledge:  the mere fact that the health insurance industry and the market generally sees this "reform" bill as a huge boost to the industry's profitability does not prove, by itself, that this is a bad bill.  Contrary to what I've seen said in various places, I haven't advocated for the defeat of this bill.  I've said from the start that there are reasonable arguments on both sides and that one must weigh (a) the corrupt, mandate-based strengthening of the private insurance industry, the major advancement of the corporatism model of government, the harm this is likely to do to some who are now covered and some who cannot afford the forced premiums, and the chances for a better bill if this one is defeated, versus (b) the various substantial benefits to many people who do not now have and cannot obtain health insurance and the risk that defeat of this bill will ensure preservation of the status quo.  Weighing those factors is difficult and, at least for me, produces ambivalence. 

That said, I've been fairly repulsed by the 2003-like swarming, bullying efforts of the President's loyal supporters (both in the White House and from Beltway journalists and their partially cloned liberal bloggers) not merely to dispute, but to demonize and personally discredit, the bill's progressive critics as insane, crazy, childish, idiotic and drugged-out, Naderite, purist liars who -- we now learn today -- are the equivalent of "global warming denialists."  Whatever else is true, progressive opponents of the Senate bill (virtually all of whom offer strategic arguments for improving it, not for preserving the status quo), have been making well-informed and substantive critiques.  I don't want to overstate this:  there has been some very responsible and informative debate among these various factions, the insults have flown in both directions, and it's understandable that passions run high on an issue of this significance among adversaries, particularly as the process mercifully draws to a close.  Still, it seems clear that campaigns by White House loyalists in government and the media to destroy the personal credibility and malign the character of the President's critics -- and to depict "the Left" as shrill, unSerious losers -- obviously aren't confined to the Bush years or to Bush supporters.

But whatever else one might want to say in favor of this health care bill -- and there are compelling arguments to make in its favor -- the notion that Democrats have "stood up to the special interests who prevented reform for decades" is too blatantly false, insultingly so, to tolerate.  As even the bill's most vocal supporters acknowledge, the White House's strategy from the start was to negotiate in secret with those very special interests in order to craft a bill that they liked and that benefits them.  If one wants to invoke the Obama-era religious mantra of "pragmatism" to argue that this was a shrewd strategic decision necessary for getting a bill passed, that at least is coherent (though not, in my view, persuasive).  But this bill is unquestionably one of the greatest boons in recent history for the private health insurance industry and other "special interests" that have long been opposing "reform."  It's a major advancement for the corporatist model on which both parties rely.  It should lead a rational person to want to buy large amounts of stock in Goldman Sachs and Citigroup in anticipation of the upcoming "reform" of that industry.  Whatever this bill is, "standing up to special interests" is not it; quite the opposite.


UPDATE:  Speaking of coordinated efforts by the President's loyal supporters to attack the credibility and character (rather than the arguments) of Obama critics, one saw this in full force after Matt Taibbi's last article, which directly criticized the President for being captive to Wall Street.  As a result, numerous progressive Obama loyalists sought to transform a couple of small, ancillary factual errors into broad attacks on Taibbi's credibility and reliability as a journalist (attacks which Taibbi discussed here [see first paragraph] and here).  Those efforts are quite similar to what has been directed at Howard Dean, the "purposefully misleadingJane Hamsher and other progressive critics of the health care reform bill.

Yesterday, I was on Democracy Now discussing the health care bill.  The video and transcript are here.


UPDATE II:  Andrew Sullivan writes:

Why is so much hostility to the bill wrapped up in the horror that private insurance companies might actually make some money off this? That's what private companies are supposed to do. They're constrained from many of their worst and cruelest tactics in this reform, but remain the primary vehicle for it, as was well advertized from the very beginning.

I think this expresses the exactly backwards conception of "what private companies are supposed to do."  Yes, they're "supposed to" earn profits -- but they're supposed to do so by competing for customers, not by having the federal government enact laws forcing people to purchase their products under penalty of having part of their income seized by the IRS.  Moreover, the claim that this is what "was well advertized from the very beginning" is simply not true.  This is what Obama said during the campaign about health care reform:

Barack Obama and Joe Biden’s new National Health Insurance Exchange will also help increase competition by insurers. . . . Through the Exchange, any American will have the opportunity to enroll in the new public plan or an approved private plan… The Exchange will require that all the plans offered are at least as generous as the new public plan and meet the same standards for quality and efficiency.

What was "advertized" -- a choice of a public plan to compete with private insurers and thus keep them honest -- is the opposite of what is being done.  And what was "advertized" about how the bill would be written -- no secret negotiations with industry representatives, everything done publicly and out in the open -- is also the exact opposite of how the bill was shaped.  Finally, nobody I've seen objects to private health care companies earning a profit per se; the objection is to the claim (voiced by Obama and others) that "special interests" have been somehow thwarted by this bill when it is clear that the bill was negotiated with them, in part written by and for them, and will result in a massive increase in their profitability.  


UPDATE III:  Obama today told The Washington Post:  "I didn't campaign on the public option."  In addition to what I quoted above, everyone interested should review the evidence here and here, and decide for themselves if that's the truth.

By Glenn Greenwald

Follow Glenn Greenwald on Twitter: @ggreenwald.

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