The point of mentioning this is that the day-to-day and week-to-week swings are generally driven by emotion and manipulation by the insiders. Trying to make a case that a particular version of the health insurance reform bill is bad or good based on the stock prices is not going to be immediately clear from short-term swings. And you can be sure if it is bad the insiders won't let us the retail investors know until they have all cashed out first. Don't get me wrong, I am not trying to imply that the current health insurance reform bill is not a water-down piece of sellout legislation but there are portions of it that are not favorable to the future profit potential of the health insurance companies. One of them is the provision that health insurance companies must spend 85% of all the money they take in from premiums on health care related expenses. That is an improvement over the current national average of 75% and will eventually affect their bottom line. On the flip side the health insurance companies will be getting new enrollees because of the mandates. That may be a wash to them but in theory we should all get more health care for our dollar.
If instead of looking at the short term trend in the health insurance stocks one takes a more extended look, you will see that really health insurance stocks are still down 50% from their highs under the Bush administration. In addition, over the past 18 months the health insurance stocks have shown very little overall appreciation (see the charts for Wellpoint: WLP and UnitedHealth Group: UNH below).
To say that the Obama administration has been very favorable to the health insurance industry is a little disingenuous. Yes he hasn't tanked the "for-profit" health insurance industry like many of us want but to say he has been good for their business is also not entirely accurate either.