With the passing of the health-care bill on Sunday, March 22, 2010, it marks a step of a new revolution in the American system that has endured for the past 100 years. Whether its good or bad for consumers, we will leave this for the people themselves to decide, however, the main focus should be, how will this bill affect the stock market?
According to the New York Times, in an article "In Reform, Boons for Hospitals and Drug Makers" by Reed Abelson, the health-care industry will be benefiting the most out of it. As it says "That would mean millions more Americans buying private health insurance and better able to pay for their hospital stays, doctors’ visits, prescription drugs and medical devices."
Hospitals and drug makers have supported this bill and eventually would benefit from the new overhaul bill. The health-care bill would cover as many as 32 million, which will added to the overall pool, meaning more people taking more drugs. In reality, this bill should mark a rally in the biotechnology field that already manufactures drugs. On the other hand, what would happen to those companies that still develop the drugs? A rise in taxes on the current companies might affect the over-all investments in developing new medications that can lead to reduced inventions. However, if successful, biotechnology companies would have higher payoff once the drug enters into the market.
Not every drug manufacturer company will benefit from it, as it says that "the generic side of the drug industry had somewhat less to celebrate. Legislators left intact a bill provision giving name-brand drug makers 12 years of marketing exclusivity on expensive medications called biologic drugs, which are made out of living cells. Many of those drugs, including cancer treatments, cost thousands or even tens of thousands of dollars a year."
The biggest industry that suffers from health bill, is the insurers. They will take a strong beating from the government with strict restrictions and limitations. I would just imagine, if there is a stock that is publicly trading, it would probably drop first thing Monday morning. However, I would most likely see that biotechnology stocks to rise, but you never know how the people will react to new bill, and only time will tell.
