They don’t always get it right, but if you take a look at the performance of health care sector stocks recently, it looks as though investors have pretty high expectations for the future. Said another way, that means most people on Wall Street are taking a close look at a health reform effort that promises to cover millions of additional people, but seems to be loosing its teeth when it comes to cost control. More consumers without meaningful cost control mechanisms (i.e., regulations) imposed on insurers and providers means only one thing to the investor crowd: “Cha-Ching!”
There’s an article in Monday’s Wall Street Journal that captures the expectations well, that the health care sector is likely to experience an infusion of new “customers” and that has many people seeing dollar signs. Of course, the market has lost many bets it has made in the past, and health reform is still largely amorphous, so the rise in stock prices may be a bit premature, but if nothing else, it’s interesting to see a Democratic proposal having a positive effect on Wall Street.
If I were a betting man–unfortunately, graduate school forbids–I’d buy up a bunch of health care stocks right now, and then be prepared to dump them if and when the second wave of health reform–cost control–makes its way back on the agenda.