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

48 Pages Posted: 19 Jul 2010 Last revised: 7 Oct 2021

See all articles by Mohamad Al-Ississ

Mohamad Al-Ississ

The American University in Cairo

Nolan H. Miller

University of Illinois at Urbana-Champaign

Date Written: July 2010

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.

Suggested Citation

Al-Ississ, Mohamad and Miller, Nolan, What Does Health Reform Mean for the Healthcare Industry? Evidence from the Massachusetts Special Senate Election (July 2010). Available at SSRN: https://ssrn.com/abstract=1641570

Mohamad Al-Ississ (Contact Author)

The American University in Cairo ( email )

P.O. Box 2511
Cairo
Egypt

Nolan Miller

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
1-217-244-2847 (Phone)

HOME PAGE: http://www.business.illinois.edu/nmiller

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
24
Abstract Views
520
PlumX Metrics