As has become all too characteristic of arguments from liberal sceptics of the Democrats’ health care plan, analyses of the recent increase in share prices of major publicly-traded health care stocks have been misleading.
As we and other analysts have documented, share prices have reacted strongly and unambiguously to news that a public option might or might not be part of the Democrats’ health care reform plans. This is in line with a report issued in November from Goldman Sachs, which estimated that a health care plan passed with a robust public option — their so called “bear” case — should result in a 36 per cent drop in the prices of publicly-traded health insurance stocks:
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