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

Author

Listed:
  • Mohamad M. Al-Ississ
  • Nolan H. Miller

Abstract

We exploit the surprise election of Republican Scott Brown to the US Senate to evaluate the market's assessment of the impact of the recent US health reform legislation on the health care industry. We find that Brown's election was associated with abnormal returns of 2.1 percent and 6 percent for investments in the health care sector overall and managed care firms, respectively. Investments in the pharmaceutical sector experienced abnormal returns of 2.8 percent, while health care facilities (e.g., hospitals) experienced abnormal losses of 3.5 percent. Firms involved with Medicare Advantage benefitted more, while those involved with Medicaid Managed Care benefitted less from the election.

Suggested Citation

  • Mohamad M. Al-Ississ & 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, American Economic Association, vol. 5(3), pages 1-29, August.
    • Handle: RePEc:aea:aejpol:v:5:y:2013:i:3:p:1-29
    Note: DOI: 10.1257/pol.5.3.1
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    Citations

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    Cited by:

    1. Claudio Socci & Maurizio Ciaschini & Rosita Pretaroli & Francesca Severini, 2015. "Assessing US Policies for Health Care through the Dynamic CGE Approach," Bulletin of Political Economy, Bulletin of Political Economy, vol. 9(2), pages 93-126, December.
    2. Amitabh Chandra & Jonathan Holmes & Jonathan Skinner, 2013. "Is This Time Different? The Slowdown in Healthcare Spending," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(2 (Fall)), pages 261-323.
    3. Duggan, Mark & Starc, Amanda & Vabson, Boris, 2016. "Who benefits when the government pays more? Pass-through in the Medicare Advantage program," Journal of Public Economics, Elsevier, vol. 141(C), pages 50-67.
    4. Jacqueline Fiore, 2017. "The Impact of the Affordable Care Act's Medicaid Expansion on Medicaid Spending by Health Care Service Category," Working Papers 1706, Tulane University, Department of Economics, revised Mar 2018.
    5. Jeffrey Clemens & Stan Veuger, 2017. "Risks To The Returns To Medical Innovation: The Case Of Myriad Genetics," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 345-357, April.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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    1. What Does Health Reform Mean for the Health Care Industry? Evidence from the Massachusetts Special Senate Election (American Economic Journal: Economic Policy 2013) in ReplicationWiki

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