Golden Sacks to insurers: Don't worry. Anything done can be undone by 2013
That's the sting in the tail of this Golden Sacks report quoted at HuffPo. To GS, though status quo is best* (bien sur), the Senate Finance Bill is the "base" scenario, a watered down version of it the "bull" scenarioMR SUBLIMINAL No shit and the HR 3962 is the "bear" scenario. But remember the baseline on financial reform? That if the banksters aren't threatening to commit suicide, the reforms are too weak? Same here. If GS isn't saying the bills are the end of the world, they're too weak.)
A Goldman Sachs analysis of health care legislation has concluded that, as far as the bottom line for insurance companies is concerned, the best thing to do is nothing. A close second would be passing a watered-down version of the Senate Finance Committee's bill.
A study put together by Goldman in mid-October looks at the estimated stock performance of the private insurance industry under four variations of reform legislation. The study focused on the five biggest insurers whose shares are traded on Wall Street: Aetna, UnitedHealth, WellPoint, CIGNA and Humana.
The Senate Finance Committee bill, which Goldman's analysts conclude is the version most likely to survive the legislative process, is described as the "base" scenario. Under that legislation (which did not include a public plan) the earnings per share for the top five insurers would grow an estimated five percent from 2010 through 2019. And yet, the "variance with current valuation" -- essentially, what the value of the stock is on the market -- is projected to drop four percent.
Things are much worse [that is, better for people who need health care], Goldman estimates, for legislation that resembles what was considered and (to a certain extent) passed by the House of Representatives. This is, the firm deems, the "bear case" scenario -- in which earnings per share for the top five insurers would decline an estimated one percent from 2010 through 2019 and the variance with current valuation is projected to be negative 36 percent.
What the firm sees as the best path forward for the private insurance industry's bottom line is, to be blunt, inaction.
The study's authors advise that if no reform is passed, earnings per share would grow an estimated ten percent from 2010 through 2019, and the value of the stock would rise an estimated 59 percent during that time period.
And now, here's the sting:
The next best thing for the insurance industry would be if the legislation passed by the Senate Finance Committee is watered down significantly. Described as a "bull case" scenario -- in which there is "moderation of provisions in the current SFC plan" or "changes prior to the major implementation in 2013" -- earnings per share for the five biggest insurers would grow an estimated ten percent and the variance with current valuation would rise an estimated 47 percent.
So there you are. "Changes prior to the major implementation in 2013." The smart money, or at least the money, knows that the real changes are 4 years off, and they've got plenty of time to revise whatever has been done to move closer to the "bull" case. So the next time a "progressive" triumphalist hands you that "36 million will be insured LOL!!!!!" line (never mentioning this will only happen, if it does happen, by 2019) do feel free to mention that the real energy for "incremental" change will be invested in attempting to prevent the insurance companies from making the shit sausage even shittier. That's what happens when you pre-compromise your initial bargaining position and then marginalize, exclude, and censor those who want to change reality instead of simply accepting it.
And since Golden Sacks owns the administration -- kidding! -- I think their views are worth paying attention to...
NOTE * I agree, but because I think a FAIL will have a salutary and purgative effect on the FKPD in 2012, and, ultimately, we'll get a better bill than the bill we're getting from the country club Republicans who are running the administration.