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Approved Health Care Bill Leads to Immediate Financial Gains For Pharma

Tue, 03/23/2010 - 5:37am
STEPHEN BERNARD,AP Business Writer; TIM PARADIS,AP Business Writer

NEW YORK (AP) — Drug and hospital companies led stocks higher Monday after House lawmakers ended months of uncertainty and approved the health care overhaul bill.

The Dow Jones industrial average rose about 44 points. Broader indexes also climbed.

Investors had expected the health care bill would pass the House, but the approval late Sunday removed some of the anxiety that has dogged stocks of hospitals and drug makers. A bill with changes made by the House now goes back to the Senate for approval. Debate could begin Tuesday.

The 10-year, $938 billion bill will extend benefits to 32 million uninsured Americans. That will have far-reaching effects on health companies. With the bill in hand, investors could place bets on winners and losers. Hospital stocks rose on expectations they would see more business and increased revenue. Some insurers fell because of greater restrictions imposed by the changes.

Many key points of the bill will not take effect for several years, though others like provisions allowing children to remain on their parents' insurance until age 26 will kick in this year.

Hospital operator Tenet Healthcare Corp. rose 9 percent, while insurer UnitedHealth Group Inc. fell 3.2 percent.

"You've got some uncertainty here lifted," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. Ablin noted, however, that other industries will face higher costs to pay for wider coverage. "What it really comes down to is that as a result of this bill health care is a beneficiary at the expense of every other sector."

 

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