Healthcare Reform and the Rally

The equity markets have posted an impressive July, up almost 7% this month. The move has occurred as the healthcare debate in Washington has simmered and faltered. Could it be that the markets are rallying because the full-blown healthcare “reform” does not appear to be achievable?

 

The markets doubts about healthcare reform are not partisan, just financial. With record deficits projected for as far as the eye can see, the markets are dubious of any government plan that will negatively impact an already bad deficit. And it is really easy to doubt the cost projections of these plans. After all, the plans call for the “rich” to pay for about 25-50% (the wide range depends on the “rich” revenue which always seems to be lower than expected)of the increased cost. The other 50-75% of the cost will be paid for through government plan “savings.” Excuse me? I have difficulty writing the words government and savings in the same sentence. After all, aren’t these the guys who paid $800 for a hammer and have cost overruns on every military contract? The Medicare Prescription Drug Plan for seniors, passed just a few years ago with great, bipartisan fanfare by President Bush and Congress, already costs more and covers fewer people than projected.

 

Watered-down Healthcare reform. The markets seem to like it!