IF you're wondering why companies like AET, AFL, UNH, and WLP are trading at single digit multiples, here's perhaps a big part of the reason: -------------------------------------------------------------
WASHINGTON (Dow Jones)--A preliminary analysis released Monday shows a $1 trillion cost for health-care legislation sponsored by Sen. Edward Kennedy, D-Mass, while a net 16 million people in the U.S. would obtain insurance coverage as a result of the bill.
Kennedy's bill, which the Senate Health, Education, Labor and Pensions Committee will consider on Wednesday, aims to extend access to health-insurance coverage to the nation's 46 million people currently lacking it. The non-partisan Congressional Budget Office, in a letter to Kennedy on Monday, said enacting the proposal "would result in a net increase in federal budget deficits of about $1 trillion over the 2010-2019 period."
The Joint Committee on Taxation, a non-partisan congressional panel that provides analysis of tax legislation, joined with the CBO on the estimate.
The analysis estimates that the bill would result in 16 million more people carrying insurance coverage.
It derived that figure by estimating that 39 million people would obtain insurance through health-insurance "exchanges," in which individuals would compare and purchase coverage. Fifteen million people would no longer receive insurance coverage through their employers, while "coverage from other sources would fall by about eight million."
The two organizations performing the analysis were careful to state that the estimate isn't finalized.
"The analysis of the proposal's effects on the federal budget and insurance coverage reflects CBO's and the JCT staff's understanding of its key features and discussions with committee staff, but does not represent a full assessment of the legislative language that was released by the committee," the letter states.
Notably, the estimate does not take into account an expected expansion in Medicaid, a federal health program for low-income people, that would cover those at up to 150% of the federal poverty rate.
The Medicaid provision is likely to both expand the number of people that would be insured under the legislation and change the cost of the bill.
The bill in its current form also does not yet include a public health insurance option or a mandate that employers provide health insurance coverage, so those provisions were not considered in the analysis either.
Kennedy spokesman Anthony Coley said committee Democrats "knew that this process would produce this estimate" and said that when "blanks" in the legislation are filled, the cost of the bill would decrease. "This is an incomplete estimate of an incomplete bill," Coley said. "We look forward to a complete CBO estimate of a complete bill."
According to the analysis, the number of uninsured people would fall to "36 or 37 million" people once the bill is fully enacted.
Republicans swiftly responded to the analysis, criticizing the Kennedy proposal because of the projections that many would lose employer-based coverage.
"Democrats keep saying that, if you like the care you have, you can keep it, but the facts about their bill don't support that statement," said Sen. Mike Enzi, R-Wyo., the top Republican on the Senate Health panel. "CBO makes it clear - the Democrats' plan will force millions of Americans to lose the care they have now."
The analysis projects a $1.3 trillion cost for providing subsidies under the health-insurance exchanges for low- and middle-income people to purchase insurance. That cost is offset in part by payments of penalties from those who don't obtain insurance, reductions in costs for other low-income health programs and increased tax revenue as a result of fewer workers receiving employer-based insurance coverage.
-By Patrick Yoest, Dow Jones Newswires; 202-862-3554; patrick.yoest@dowjones.com
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(END) Dow Jones Newswires
June 16, 2009 07:37 ET (11:37 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 07 37 AM EDT 06-16-09
2 comments:
The post took me back to the late 1970's and mid 1980's for some reason. Strange rock bands like the Dead Kennedy's and Violent Femmes rocked MTV.
J.P.
Jim Cramer covered this topic. I would not buy any of the stocks you mentioned. Health care will be watered down with the house and senate being partisan.
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