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Health-Care Reform: It's Not Over Yet

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"It ain't over till it's over."

Yogi Berra's insightful comment applies to sports, quite a few left-for-dead companies, and apparently health-care reform.

Suddenly things have become very interesting after Republican Scott Brown won Ted Kennedy's Senate seat yesterday. The process of making health-care reform bill into law isn't complete, and Democrats no longer have a filibuster-proof majority in the Senate.

The future ain't what it used to be
The big fight was destined to be between liberal Democrats in the House and moderate Democrats in the Senate as they worked to rectify the two versions of the bills. Instead Democrats will have to team up to work with or around Republicans.

One possibility is to avoid going back to the Senate by having the House of Representatives just approve the Senate version of the bill without merging the two bills. That would clearly benefit health insurers like UnitedHealth Group (NYSE: UNH  ) and WellPoint (NYSE: WLP  ) since the Senate's version doesn't include a federal government-sponsored public option that would compete with private insurers.

Another possibility is for the Senate to approve a merged bill under a procedure called "reconciliation", which only requires 51 votes to pass tax measures instead of the 60 required to end debate under the usual Senate procedure. Winners under this possibility include labor unions that represent workers for companies like Ford (NYSE: F  ) and Goodyear Tire & Rubber (NYSE: GT  ) . The Senate version contains a large tax on "Cadillac plans" that some union workers get. Any merged bill is likely to tone down the tax to keep liberal Democrats in the House happy.

While working around the Republicans seems possible, nothing is ever that simple in Washington. Democrats have to think about their political futures, and if you assume that Brown's come-from-behind win was mostly a statement against health-care reform, then Democrats may be reluctant to push health-care through unchecked by Republicans.

We may get an idea of the direction this is headed when the President gives his State of the Union address next week.

It's like deja vu, all over again
Where does this leave investors? Pretty much where we've been since the health-care reform debate started so many months ago. Shares of health-care stocks traded higher yesterday in anticipation of a potential win by Brown and they're likely to continue to trade higher and lower depending on which politician is spouting off at the pulpit.

While we could see some boost if investors truly believe that health-care reform is dead, don't expect the same kind of substantial surge that we saw in the latter half of 1994 when Hillary Clinton's health-care reform died.

Company/Index

Low price in 1994

Ending price in 1994

Increase in price

Johnson & Johnson (NYSE: JNJ  )

$36.00

$54.75

52%

Merck (NYSE: MRK  )

$28.12

$38.13

36%

Medtronic (NYSE: MDT  )

$67.00

$108.52*

62%

S&P 500

435.86

459.27

5%

Source Yahoo! Finance. *Split adjusted.

Health-care stocks, especially drug and medical device companies, haven't been hurt nearly as much this time around because Congress has been more sympathetic to their needs. (That's just a polite way of saying the industry was more prepared and had a better army of lobbyists.)

Even with all the complaining they did, health insurers won't be crippled by any health-care reform that might be passed. The only thing that could have been truly disastrous for them -- single-payer coverage -- was never on the table.

When you come to a fork in the road, take it
Yogi Berra's puzzling driving directions aren't such a bad roadmap for investors. Changes in the economic and political scenery will lead to decisions that need to be made about your portfolio. For some, like whether to invest in health-care stocks right now, I'm not sure it matters which fork you take -- both will get you somewhere.

Is this the end of health-care reform or will Democrats find a way to push it through? Does it matter that much for your pocketbook or portfolio? Let us know in the comment box below.

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UnitedHealth and WellPoint are Motley Fool Inside Value recommendations. Ford and UnitedHealth are Stock Advisor choices. Johnson & Johnson is an Income Investor pick. The Fool owns shares of UnitedHealth and Medtronic and has written puts on Medtronic. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Brian Orelli, Ph.D., thinks ninety percent of investing is half-mental. He doesn't own shares of any company mentioned in this article. The Fool's disclosure policy really didn't say everything it said but the things it did say can be found here.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2010, at 3:48 PM, mrmytzlplk wrote:

    In a state that has near-universal coverage from mandated health insurance, where post-election polling of voters yesterday shows a 55-62% approval rating (depending on whose poll you look at) for President Obama, how was this mostly a statement against Obama's push for health-care reform? I don't doubt there was a small factor in this, but I think a lot more had to do with the 10% unemployment rate nationwide and the fact that Coakley was a lazy candidate who ran a crappy campaign and called Curt Schilling a Yankee fan -- people in Mass. take their baseball SERIOUS, folks. You'd better believe it.

  • Report this Comment On January 20, 2010, at 4:07 PM, spawn44 wrote:

    You socialist fools have two good eyes but you still can't see. The fact Mass. has universal health coverage is one of the reasons they voted for Brown, they know from experience, it doesn't work.

  • Report this Comment On January 20, 2010, at 4:56 PM, Fool wrote:
  • Report this Comment On January 20, 2010, at 5:19 PM, Oldfool65 wrote:

    The "Healthcare Reform" debate was never about healthcare reform; that's why it's failing.

    The "debate" was about "Death Panels", Abortion Rights, Socalism, Drug company profits, Insurance industry profits, domestic political partisanship, trying to insure that Obama's presidency is a failure, income tax reform, the deficit, and numerous other non-health agendas.

    No where was the out of pocket cost to patients addressed. No where was increasing the supply of doctors and nurses discussed. No where, other than electronic medical records, was a streamlining of the health delivery system addressed.

    Insurance premiums will go up 25% for the average consumer this year - WHY! My doctors say they aren't making money, the hospitals say they aren't making money, the insurance companies and drug companies cry they aren't making enough money - WHERE is all the money going?

  • Report this Comment On January 20, 2010, at 6:09 PM, stockmenot wrote:

    Do you want to know where the money's going??? To the drug companies and Insurance Companies. We take on the highest drug prices in the World, just so Countries like Canada can get theirs cheaper...we pay for theirs. Now why isn't that being addressed???

    The most obvious and common sense reason is that we pay the highest "end of life" costs of anyone in the World. Medi Cal offered my 94 year old dying grandmother an intestinal blockage surgery that would of required hundreds of thousands of dollars and she surely would of died anyway...I had that surgery at 45, and wished I had died. We are the most religious, but so unwilling to let our loved ones go to heaven...come on folks is it really that difficult to connect the dots???

  • Report this Comment On January 20, 2010, at 7:38 PM, xetn wrote:

    Stockmenot: What you are describing is the result of government intervention, that "allows" the US drug companies to discount drugs in foreign countries while the US citizens subsidize the cost by paying more.

    Have you tried to go to Canada and purchase drugs cheaper? Or how about Mexico?

    As for one reason the Dems lost is:

    It seems that an ABC/Washington Post poll found that, when asked, "Generally speaking, would you say you favor smaller government with fewer services or larger government with more services?" 58 percent of Americans favored smaller government with fewer services to 38 percent who favor more government and more services.

  • Report this Comment On January 20, 2010, at 7:48 PM, knoconnor wrote:

    "Democrats no longer have a filibuster-proof majority in the Senate."

    Because Joe Lieberman is no longer really a Democrat, they never had one.

  • Report this Comment On January 20, 2010, at 7:57 PM, mrmytzlplk wrote:

    @spawn44 You mean the universal health care legislation that was forced on an unsuspecting Mass. public by that rabid socialist Mitt Romney? Good point -- pity my pinko eyes don't work, else I'd have seen that.

  • Report this Comment On January 21, 2010, at 1:51 AM, pkluck wrote:

    Joe Lieberman was bought off just like Lousiana and Nebraska so they DID have a filibuster-proof majority.

    Thank Gawd Brown got elected, it will probably save me tens if not hundreds of thousands of tax dollars in the future. Boon doogle health care down the drain, boon doogle energy tax down the drain, etc. I haven't been this happy since Clinton was impeached.

  • Report this Comment On January 21, 2010, at 2:01 AM, ChannelDunlap wrote:

    I really wish the Dem's had just taken the Republican position of flipping the bird to anybody who disagrees and pushed the bill through. At least we'd have gotten something accomplished. Instead it's looking like the last few months of debate have all been for nothing.

  • Report this Comment On January 21, 2010, at 8:14 AM, meenyoo wrote:

    The way I see it, Republicans were never interested in any kind of healthcare reform, and Democrats had the majority, wasted months fighting among themselves and failed to do anything useful. They're all pretty worthless.

    So-

    I propose that the Congress' cadillac healthcare plan be suspended until they pass a bill that makes affordable healthcare available to every citizen of this country. Don't care who takes the credit as long as it gets done. And if you need more healthcare workers, well there's lotsa people out there who need jobs.

  • Report this Comment On January 21, 2010, at 5:16 PM, clydejazz wrote:

    The Supreme Court just threw out the restriction on corporations giving money directly to political campaigns. Now they don't have to even pretend to funnel the money in from elsewhere.

    Insurance companies can now buy everyone in Congress, not just the Joe Liebermans of the world.

    Think our premiums will go up 10-20% next year again?

    And the year after that? and the year after that? and......................and.............and..........

  • Report this Comment On January 21, 2010, at 5:20 PM, clydejazz wrote:

    The Supreme Court just threw out the restriction on corporations giving money directly to politicians. Now they don't even have to find hundreds of "donors" to funnel the money through--they can buy every member of Congress, not just the Joe Liebermans of the world.

    Think our health insurance premiums will go up another 10-20% next year? and the year after that? and the year after that? and.. and...and......

  • Report this Comment On January 22, 2010, at 6:47 PM, footej wrote:

    Let's get real. Obama's healcare plan closely resembles the Mass. State plan. And the people of Mass. have elected the ONE person who can stop Obamacare in its tracks.

    The people of Mass. have realized that the problem with our healthcare system is too much government control. More government control wont solve the problem - this is a classic example of Govenment failure, not Market failure.

    And if the "liberal" people of Mass. dont like Obamacare, the rest of the country doesnt like it either.

  • Report this Comment On January 22, 2010, at 7:44 PM, footej wrote:

    mrmytzlplk, and your point is? Mitt Romney is a slippery, wishy washy socialist/conservative RepubliCrat (well dressed, though I must admit). Does it really surprise anyone that a career politician - regardless of stripes - would force ill- concieved legistlation on the people of Mass (or the rest of the country) for polictical gain?

    Most Repulicans and Democrats are flip-sides of the same political coin. Let's hope Brown and the ensuing influx of new elected representitives are different and bring the real change that Obama promised but - because of his career political instincts/obligations - can't deliver on.

    Full disclosure - I was anti-Obama before it was cool...

  • Report this Comment On January 22, 2010, at 7:59 PM, topsecret10 wrote:

    Healthcare reform Is D.O.A, just like the Democrats In 2010. Our congress Is a joke............ TS

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