Health Care Stocks Rise on Death of Health Reform

In "Markets Salivate at Prospect of Healthcare Reform's Defeat," Ken Terry hits the nail on the head: http://industry.bnet.com/healthcare/10001627/markets-salivate-at-prospect-of-healthcare-reforms-defeat/ . He reports that "investors are pumping up healthcare stocks in the hope that reform will fail and that the free market will continue to push up health costs- and profits for the health industry." The Wall Street Journal reports separately that Pfizer and Merck stocks rose on investor "hopes for more concessions to be made in health legislation."http://online.wsj.com/article/SB10001424052748704561004575013480490353788.html?mod=googlenews_wsj

Where will these higher health costs and profits come from? Expect health insurance premiums to go up. Expect little help from the government or from the proposed center for comparative effectiveness research. The proposed center, whose intent was to compare alternative treatment regimens and suggest incentives for those that work best, will die with health reform.

I don't think this is what voters in Massachusetts had in mind yesterday. They wanted compromise on health reform, not open season on their wallets. Pharmaceutical and medical device manufacturers, hospitals, some insurers, and many medical specialists can celebrate. Their stocks are on the rise and healthcare markets remain almost entirely in their hands.