Reconciliation is a nasty word for healthcare stocks (UNH, WLP and HUM)

Posted Aug 20th 2009 6:50PM by Wade Hansen
Filed under: Bad News, Rumors

Unless you've been spending your summer vacation on a tropical beach with no television or internet access, you have seen that the public reception to Congress' proposals for heathcare reform have not exactly been well accepted. I mean, nut jobs showing up to town hall meetings with guns strapped to their legs isn't really the norm.

So you would think that the Republicans who are against a public insurance plan are in control, right? Not so fast.

Congressional Democrats are now talking about splitting the healthcare bills into two parts so they can take advantage of a loophole called reconciliation.

Reconciliation is a parliamentary maneuver that was created so the Senate could pass key budget reforms without needing to get a full 60 votes. With reconciliation, you only need 51 votes -- which should be a relatively easy number to obtain with a Democratic-controlled Senate.

This may allow Democrats to force a public insurance plan through, regardless of Republican opposition.

Of course, many stock investors are worried that a public insurance plan would severely hurt companies like UnitedHealth Group Inc. (NYSE: UNH), WellPoint, Inc. (NYSE: WLP), and Humana Inc. (NYSE: HUM) that would be forced to compete on an uneven playing field.

To protect themselves against potential drops in these companies' stock prices, some investors are turning to put options while they wait to see what is ultimately going to happen.

Looks like it's shaping up to be a fun Fall session of Congress.

Wade Hansen owns is an analyst for Learning Markets

Tags: healthcare, healthcare stocks, healthcarereform, HealthcareStocks, hum, unh, wlp