Policy uncertainty rears its head
You'll remember how policy uncertainty was a big worry for Republicans in the run-up to the election. The idea was that if business didn't know what next year's policy would look like, they couldn't make investments. There wasn't much of evidence of it at the time, but there is now -- and it's because of the Republicans:
Investors say they’re increasingly optimistic on health insurers’ future for two crucial reasons: Regulations released this year have been relatively industry-friendly, increasing stability, and the health reform’s new business opportunities are beginning to look more tangible.
“As it stands today, we still have compressed valuations because of uncertainty, but that is rolling off as we get more clarity,” says Les Funtleyder, a portfolio manager with Miller Tabak Advisors LLC . “Combined with continued strong performance related to health care growth cost trends means stocks should benefit.”
At the J.P. Morgan Health Care Conference in San Francisco this week, major health insurers outlined the major expansion opportunities they see in the health reform law.
Aetna is exploring how to capitalize on the individual market, expected to boom in 2014 when Americans must purchase health insurance or pay a fine.
“We have major efforts underway to strategize on how to take advantage of those opportunities,” said the insurer’s CFO, Joseph M. Zubretsky, in a presentation to health investors. “We’re clearly understanding the risks…but with millions coming on to the health exchanges, one needs to not only balance risk but really understand the opportunity for growth that exists in this market place.”
In other words, the health-care industry is having to balance investments that it wants to make against the concern that Republicans will repeal the bill and yank away those opportunities. Before the election, John Boehner said employers "are afraid to invest and hire in an economy stalled by ‘stimulus’ spending and hamstrung by uncertainty." Now he's the guy stringing the hams.
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