Health Insurers Trade

Guys I am curious to get your take on the trade for health insurers (UNH, WLP etc.) with this pending legislation. Will 30 million new paying customers be good for these guys? Or will a health overhaul be detrimental? I guess the market is agreeing with the latter…WLP is down 7% this morning.

Yeah, part of the reason for this is adverse selection. The sicker population will sign-up and get coverage. The younger healthy population will not sign up, because the fine is a lot cheaper than paying for the insurance. This will drive up managed care medical loss ratios, which have an enormous impact on earnings. Also, because of budget issues Medicaid and Medicare rates are not looking good into the future. This government business as been a major driver of growth in the industry, as commercial enrollment is down a lot.