I'm reluctant to embark on a tangent here, but facts are important.... John McKown wrote: >ACA == "Affordable Care Act" aka "Obamacare". The law which basically >tries to socialize medicine like it is in Canada, the U.K., and Europe.
The Patient Protection and Affordable Care Act contains many provisions, but aside from expanding Medicaid to legal residents of U.S. states that chose to expand Medicaid (currently 31 states plus the District of Columbia, for those with incomes up to 138% of the federal poverty line who sign up), it didn't "socialize medicine" or try. (U.S. Medicaid is "single payer" medical coverage, with private medical providers. It is not at all like, for example, the United Kingdom's National Health Service with its public provision of medical services. And many states hire private companies to handle Medicaid-related claims processing.) The PPACA: (a) requires practically everybody else ineligible for government insurance (e.g. Medicaid) to purchase private medical insurance (with government subsidies for those up to 400% of the poverty line) or face a tax penalty, and (b) requires that they buy medical insurance that has more complete coverage than what was typical in the past, i.e. a higher priced policy, ceteris paribus. In other words, the PPACA delivered over 12 million net new, paying customers to the U.S. private medical insurance industry, with the government paying a big chunk of their premiums. And it required everybody else already in the private sector, including employers, to buy only the more complete coverage -- the higher cost/higher value policies, ceteris paribus. There were reasons the U.S. medical insurance industry supported the PPACA. :-) >It basically destroyed profitability for health insurers. The PPACA certainly didn't do that. Quite the opposite: it (controversially) guaranteed insurer profitability with government risk-sharing during the transition years. Indeed, U.S. medical insurance companies are reporting excellent, even record, profits. Let's look at Wall Street's assessment for some sanity checking. The PPACA was signed into law on March 23, 2010. It wasn't clear that it would become law, and it was particularly unclear just after the election of Scott Brown to the U.S. Senate on January 19, 2010. With Brown's election, the PPACA was in grave almost mortal danger. So it's as good a comparison date to pick as any for this exercise. (I can't go too far back because then you'd have more substantial presidential election and financial crisis complications.) I'll use the closing prices of UnitedHealth (UNH), Anthem (ANTM), Aetna (AET), and Cigna (CI) on January 20, 2010. Those are the top four private medical insurance companies in the United States, in order of market capitalization. Then we'll look at their closing stock prices yesterday. Finally, we'll compare the performance of those stocks to the S&P 500 (most of the U.S. stock market as a whole) over the same interval. Here we go! UHN: yesterday 165.34, 2010-01-20 34.55 (4.75X) ANTM: yesterday 165.92, 2010-01-20 67.68 (2.45X) AET: yesterday 128.84, 2010-01-20 32.48 (3.97X) CI: yesterday 151.21, 2010-01-20 38.20 (3.96X) S&P 500: yesterday 2357.49, 2010-01-20 1138.04 (2.07X) To be more precise I'd adjust for dividends (which takes a bit of work), but the basic comparison would still hold. U.S. medical insurance companies' stocks have typically outperformed the U.S. stock market as a whole by roughly 2 to 1, with Anthem more modestly outperforming the market. These companies happen to be your company's competitors, and Wall Street is clearly very happy with them and their profits. Ah, but is this a "Trump bounce," with the medical insurance stocks doing particularly well after President Trump's surprise election? Well, let's pick November 7, 2016 (the day before the U.S. election), look at the closing prices, then recalculate the multiples versus January 20, 2010: UNH: 2016-11-07 141.93 (4.11X) ANTM: 2016-11-07 123.49 (1.82X) AET: 2016-11-07 109.74 (3.38X) CI: 2016-11-07 126.25 (3.30X) S&P 500: 2016-11-07 2131.52 (1.87X) In a word, no. With the exception of industry lagging but not market lagging Anthem, the medical insurance company stocks handily beat the market over that interval, too. Aetna happens to be one of the companies that has recently talked publicly about the interesting, creative, new ways they are using their new mainframes. -------------------------------------------------------------------------------------------------------- Timothy Sipples IT Architect Executive, Industry Solutions, IBM z Systems, AP/GCG/MEA -------------------------------------------------------------------------------------------------------- E-Mail: [email protected] ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to [email protected] with the message: INFO IBM-MAIN
