(This piece appeared first at Blog of the Century).
If you want to know whatâ€™s really surprising in economic policy, itâ€™s sometimes helpful to listen to what people are saying. Itâ€™s sometimes much more helpful to watch what people are buying and selling with real money. On this, liberal and conservative economists are presumably in real agreement.
Thus, Iâ€™m really ticked off at Matthew O’Brien of the Atlantic, who stole a march on me with the chart of the week, shown below. Oâ€™Brienâ€™s great column shows a graph of Aetnaâ€™s stock price over the past week. Aetnaâ€™s stock price rose 6.5 percent in a single day. Similar (slightly less dramatic) patterns can be observed for other major insurers.
Why did this happen? O’Brien notes that the insurance industry prefers one outcome, can live with a second, and is dreadfully afraid of the third. In my view, firms such as Aetna really hope that the full structure of the Affordable Care Act is struck down. These firms can also live with the entire act being upheld. They would, however, be seriously hurt if the individual mandate were overturned while the rest of the new lawâ€™s provisions for guaranteed-issue and community rating were left basically intact.
Comments by Justice Kennedy and other justices made this last outcome seem less likely. Judging by Intradeâ€™s bigÂ swing in the probability of the mandate being upheldÂ (shown below)Â the odds of health reform being upheld have noticeably declined, too.
Wall Street has decided that whatever the fate of Obamacare, the result will be good for health insurers. Whether it’s quite so good for the sick and uninsured remains to be seen.
I hope I’m wrong aboutÂ the answer to that one.