Health reform: Dog Bites Man edition

Health insurance company stocks tanked this week last week on the news that President Obama wants to slash their Medicare payments. Except that doesn't even remotely qualify as "news."

There's a lot more to Obama's budget and his plans for health reform than this but he wants to cut $177.5 billion from the subsidies the government pays to private insurers over the next ten years and to subject the plans to a new bidding process to win the right to service beneficiaries in the Medicare Advantage program.

That's no small amount of money and the market reacted accordingly. The folks at the Wall Street Journal took a snapshot after the budget came out Thursday:


Here's the damage as of mid afternoon. Humana: down 20% UnitedHealth Group: down 14%. Coventry Health Care: down 14%. Aetna: down 13%. WellPoint: down 10%. Cigna: down 9%

Far be it from me to criticize but how on earth could this have caught anyone by surprise? Now's comes the part where I concede that I come at this from a Washington perspective not a Wall Street one. But still. (And I'm not the only one who's incredulous over this. Check out Matthew Holt and Robert Laszewski, too.)

And it's not just that investors had the months between Obama's election and inauguration to prepare themselves. Details about the budget started appearing in the Journal, the New York Times, the Washington Post and other outlets in the few days leading up to the budget. Obama's address to a joint session of Congress Tuesday also highlighted that the president intended to tackle health reform, a costly agenda.

The Democratic House passed a $50 billion, ten-year cut in Medicare Advantage back in 2007, too. (That was the dog licking its chops.) Though it never became law, that legislation sent an unmistakable signal of where Democrats' heads are. Heck, even John McCain was looking to take a pound of flesh from the insurance industry, indicating that even having a Republican in the White House wasn't going to fully protect them this year.

Jeffrey Young is a staff writer at The Hill.

Presented by

Jeffrey Young

Jeffrey Young is a staff writer at The Hill, the newspaper for and about Congress, where he covers health care, lobbying, politics, and the intersection thereof for the "Business & Lobbying" section. He's been covering health policy in Washington for a decade and still hasn't heard that one good idea that will fix everything. Email Jeffrey at jeffrey.young.atlanticbusiness@gmail.com

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A Stop-Motion Tour of New York City

A filmmaker animated hundreds of still photographs to create this Big Apple flip book

Video

The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"

Video

This Japanese Inn Has Been Open For 1,300 Years

It's one of the oldest family businesses in the world.

Video

What Happens Inside a Dying Mind?

Science cannot fully explain near-death experiences.

More in Business

Just In