President Barack Obama made a last-ditch bid to save his stalled healthcare reform on Thursday, clashing frequently with Republican leaders at a bipartisan summit and moving no closer to a compromise.
Health insurer stocks closed slightly higher, performing better than the broader U.S. market as investor concerns waned about a sweeping healthcare reform that would hurt profits. Analysts said they expected a much more diluted version of the plan would eventually be adopted.
The following are analysts' comments on the summit.
KIM MONK, ANALYST, CAPITAL ALPHA PARTNERS
What Wall Street is concerned about ... is that they don't get an answer for months, whether it's going happen, whether it's going happen via reconciliation, whether it's the big bill or a skinny bill.
I think the concern for managed care has always been -- well, if the whole big bill blows up -- are we looking at a package of just insurance market reform on their own without expanded coverage which is potentially more harmful.
For the provider sector, particularly hospitals and nursing homes, I think the concern going forward is ... it could become a hard reimbursement environment for providers next year as Congress prepares to change its focus to look at the deficit and Medicare spending.
JOHN SULLIVAN, DIRECTOR OF RESEARCH, LEERINK SWANN
Obama's coat tails are looking very short. Democrats know that they're on their own with the voters in November and at the end of the day I think you'll hear aggressive rhetoric but I think you'll see a moderate final approach.
You could see legislation in this Congress that curbs health insurers' practices ... that allows people who buy healthcare individually ... to band together and be treated as group purchasers. Those are things that I think Democrats and Republican can agree on.
ART HENDERSON, ANALYST, JEFFERIES & CO
The most sensible approach at this juncture is trying to do incremental changes. Instead of going after this gigantic approach they ought to go back and focus on the things that they agree on, such as portability of insurance across state lines, preexisting conditions.
The PBMs (pharmacy benefits management companies) have been viewed as a safe haven from these reform changes and I think that's still the case.
LES FUNTLEYDER, ANALYST, MILLER TABAK & CO
We still believe that in the short term whatever reform occurs will be incremental not comprehensive. That would be considered a positive psychologically for the HMOs.
In the long run, and that could be a decade, eventually we're going to have to address healthcare reform again because the things that have driven us to this point will not have abated -- that's cost and access.
JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT
It's a farce, today's meeting, because Obama has pivoted to the left, the Republicans are not going to cooperate with it, so the reason the insurers (shares) would be ticking up is a feeling Obama might not get what he wants.
JON LECROY, ANALYST, HAPOALIM SECURITIES
It's obviously a big show because the plan that Obama pulled out was essentially a rehash of what had already kind of failed. There wasn't any compromise in my view of what the Republicans are looking for. There wasn't any tort reform or crossing state lines for insurance and the bill is still pretty big with massive tax increases.
My guess is we'll probably end up seeing a second round with a much smaller plan.
Impact on big pharmaceutical companies: The last bill was $10 billion in taxes to pharma (pharmaceutical companies) and that's the least of pharma's problems. Their bigger problem is all the generic exposure they're facing in the next five years and the fact that they're not putting out that many new drugs.
FRED DICKSON, CHIEF MARKET STRATEGIST, D.A. DAVIDSON & CO
From Wall Street's perspective, it's going to be a great big non-event. Expectations going in are that there are going to be very little new initiatives offered.
(Reporting by Bill Berkrot, Caroline Valetkevitch, Edward Krudy, Ellis Mnyandu and Rodrigo Campos in New York, Susan Heavey in Washingon; compiled by Michele Gershberg; editing by Anthony Boadle)