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


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  • Mohamad Al-Ississ
  • Nolan H. Miller
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    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.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16193.

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    Date of creation: Jul 2010
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    Publication status: published as Miller, N., Al-Ississ, M. 2013. What Does Health Reform Mean for the Healthcare Industry? Evidence form the Massachusetts Special Senate Election. The American Economic Journal: Economic Policy
    Handle: RePEc:nbr:nberwo:16193

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    1. Brian Knight, 2004. "Are Policy Platforms Capitalized into Equity Prices? Evidence from the Bush/Gore 2000 Presidential Election," NBER Working Papers 10333, National Bureau of Economic Research, Inc.
    2. Seema Jayachandran, 2004. "The Jeffords Effect," UCLA Economics Online Papers 297, UCLA Department of Economics.
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    Cited by:
    1. Jonathan Hartley, 2011. "Stock Prices and the Doctor Supply: Effect of Medicare Residency Policy on Healthcare Industry Firms," Working Papers 2011-011, Becker Friedman Institute for Research In Economics.
    2. Patricia Foo & Wichsinee Wibulpolprasert, 2013. "Who bears the burden of the U.S. health reform? An Event Study Incidence Analysis," Discussion Papers 12-035, Stanford Institute for Economic Policy Research.
    3. repec:sip:wpaper:12-028 is not listed on IDEAS


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