What Does Health Reform Mean for the Healthcare Industry? Evidence from the Massachusetts Special Senate Election

Mohamad Al-Ississ and Nolan H. Miller

No 16193, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The recent reform of the U.S. health care system has been described both as a boon and a death blow for the healthcare industry and for private insurers in particular. We exploit the surprise election of Republican Scott Brown to the U.S. Senate, which dealt a serious blow to the prospects for reform by depriving Democrats of their 60-vote "filibuster-proof" majority, to evaluate the market's assessment of Health Reform's impact on the health care industry. We find that Scott Brown's election was associated with an abnormal return of 2.2 percent for a typical dollar invested in health care stocks and an abnormal return of 6.3 percent for a typical dollar invested in managed care firms. A typical dollar invested in the pharmaceutical sector experienced abnormal returns of 2.9 percent, while investments in healthcare facilities (including hospitals) experienced abnormal losses of 3.4 percent. Analysis of firms participating in government programs show that firms involved with Medicare Advantage experienced gains while those involved with Medicaid Managed Care experienced losses due to the election.

JEL-codes: D72 G14 I11 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-hea and nep-ias
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Citations: View citations in EconPapers (6)

Published as Al-Ississ, Mohamad M., and Nolan H. Miller. 2013. "What Does Health Reform Mean for the Health Care Industry? Evidence from the Massachusetts Special Senate Election." American Economic Journal: Economic Policy, 5(3): 1-29.

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