United Healthcare & Wellpoint win delay on healthcare tax

You read that headline correctly. They had it planned all along and that may be at the core of why United Healthcare, symbol UNH, stock moved up almost 18% in just 8 trading days. Here's some excerpts from the news out this morning from Bloomberg.com.

Health Insurers Win Delay on Start of $70 Billion in Added Fees

By Alex Nussbaum


Dec. 20 (Bloomberg) -- UnitedHealth Group Inc., WellPoint Inc. and smaller U.S. insurers gained a year under Senate Democrats’ proposed health-care legislation before the start of a tax that industry lobbyists say will drive up premiums.

The measure proposed yesterday by Senate Majority Leader Harry Reid would also exempt some nonprofit insurers from the tax, shifting more of the burden to the for-profit companies, said Elizabeth Hall, a vice president at Indianapolis-based WellPoint.

The insurer tax, amounting to about $70 billion over 10 years, was to start next year under a previous version of the Senate measure. That would have forced insurers to take $6.7 billion out of profit, since they’ve already signed contracts setting rates for 2010, said Matthew Borsch, a New York-based analyst for Goldman Sachs Group Inc., in a Dec. 16 interview. The new version also postpones more of the tax until after other parts of the health overhaul kick in.

“We made some pretty salient arguments that people are going to be paying for something before they see any benefit,” Hall said in a telephone interview today. “There’s a policy logic behind it and also a political logic: Who wants to tax their constituents before they see any benefits?”

Without the change, Borsch said, 2010 earnings per share at UnitedHealth, based in Minnetonka, Minnesota, would have been cut 25 percent, while those at WellPoint would have been diminished 28 percent.

I have said in previous posts to watch the stock prices of these healthcare stocks to see if these changes are good for average Americans. If the stock prices keep going up, it is good for their shareholders but bad for average Americans. If their stock price drops, it will be bad for shareholders and good for average Americans. Let's see where the price of the stocks go when the trading day closes on Monday.