Thursday, February 26, 2009

Healthcare sector takes a beating after speeches by Obama and economic advisors.

Traders responded to Obama’s budget proposal cuts by selling of healthcare companies. Humana was down almost 20% today, dropping from 40 to 23.64 since Monday. While over the past week, shares of the S&P 500 Managed Health Care sector fell 21%, shares of Humana were hit the hardest because Medicare plans are a large portion of their business. The Centers for Medicare and Medicaid Services (CMS) has invited public comment on these preliminary rates before releasing final rates on April 6, 2009. Humana, as well as other companies in the industry will attempt to fight these newly proposed payment rates at the hearing. In my opinion little can be done considering the president and his economic leaders have targeted Medicare Advantage as a major cost cutting initiative. Jared Bernstein, the U.S. Economic Policy Adviser was on MSNBC yesterday and called out Medicare Advantage, saying it was inefficient and slashing payment rates would be a tremendous source of savings.

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