Goldman Sachs: No Health Reform Means Soaring Profits for Insurers
November 13, 2009
(ChattahBox)—A study released by Goldman Sachs on the effects of health care reform legislation on insurance companies’ profits, not surprisingly concluded that insurers would rake in the cash if no health care reform measures were passed. The next best scenario for insurers, according to the study, would be a watered down version of the Senate Finance Committee’s Baucus bill, which has been criticized as a big giveaway to insurance companies. The recently passed House reform bill, which includes a weak public option has insurance companies the most worried.
The study analyzed the stock performance of private insurers under four versions of health reform legislation. The study focused on the five biggest insurers with publicly traded shares, Aetna, UnitedHealth, WellPoint, CIGNA and Humana.
If no health reform is passed, the five big insurers would stand to see earnings per share grow about ten percent from 2010 through 2019, with the value of their stock soaring an estimated 59 percent. This of course is no surprise and is precisely why the insurance companies are spending billions to fight health care reform.
A weakened Baucus bill would only slightly eat into the insurers’ rising profit margin. Earnings per share for the big five insurers would grow about ten percent, the same level if no health care reform is passed and stock value would rise at 47 percent. The Baucus bill that passed through the Senate Finance Committee has no public option.
The Goldman Sachs study predicts the probability of health care reform passing at 75 percent. Let’s hope they are right.
Source: Huffington Post
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