Insurers, drugmakers take hit under Obama plan | Reuters
Insurers, drugmakers take hit under Obama plan
Thu Feb 26, 2009 8:50pm GMT
By Susan Heavey - Analysis
WASHINGTON (Reuters) - U.S. President Barack Obama's 2010 budget proposal takes direct aim at drugmakers and health insurers to help fund an overhaul of the U.S. healthcare system.
His plan, outlined Thursday, calls for lowering Medicare payments to private insurers, allowing consumers to buy cheaper medicines from overseas and preventing drug companies from making deals that block generic competition.
Shares of U.S. health insurers suffered, with Humana Inc down 19 percent, Aetna Inc off 11 percent, Cigna Corp down 7 percent, UnitedHealth Group Inc off 12 percent and WellPoint Inc down 9 percent in afternoon trading.
Shares of drugmakers also fell. The American Exchange Pharmaceutical Index, which includes GlaxoSmithKline Plc, Merck & Co Inc and Johnson & Johnson, was down 3.6 percent, underperforming the broader market.
Congress will consider the White House proposal as it spends the coming months crafting a spending plan for fiscal 2010 that begins October 1.
While Obama could seek action on anti-competitive drug deals and drug imports without Congress, many other changes would need lawmakers to implement them through legislation.
"Any time you contemplate major legislative changes in the health care system, you have something to worry about. I think the question is: At the end of the day how are they going to come out?" said Paul Heldman, a healthcare policy analyst at Potomac Research Group in Washington.
"The Medicare managed care insurers are vulnerable to taking some sort of cut in their payments, as are the drugmakers," he said