Pretty interesting. Goldman Sachs evaluates the impact of the Finance Committee health care bill, the House bill and no bill on the value of insurance stocks over the next 10 years.  They focused on the impact of Wall Street’s biggest insurance stocks: Aetna, UnitedHealth, WellPoint, CIGNA and Humana.

The best scenario for the insurance companies is doing nothing:

The study’s authors advise that if no reform is passed, earnings per share would grow an estimated ten percent from 2010 through 2019, and the value of the stock would rise an estimated 59 percent during that time period.

The second best scenario, which they use as a “baseline” and which they give the best chance of passage, is the Senate Finance bill:

The Senate Finance Committee bill, which Goldman’s analysts conclude is the version most likely to survive the legislative process, is described as the “base” scenario. Under that legislation (which did not include a public plan) the earnings per share for the top five insurers would grow an estimated five percent from 2010 through 2019. And yet, the “variance with current valuation” — essentially, what the value of the stock is on the market — is projected to drop four percent.

Their “bull scenario” is the Senate bill “watered down”:

The next best thing for the insurance industry would be if the legislation passed by the Senate Finance Committee is watered down significantly. Described as a “bull case” scenario — in which there is “moderation of provisions in the current SFC plan” or “changes prior to the major implementation in 2013″ — earnings per share for the five biggest insurers would grow an estimated ten percent and the variance with current valuation would rise an estimated 47 percent.

According to Jon Walker, “weakening” probably entails having the individual mandate strengthened, community rating range expanded to 1-5 again, transparency elements eliminated, and regulation weakened in addition to removing excise tax on insurance and the Medicare Advantage provisions.

And the worst case scenario?  The House version of the public option:

This is, the firm deems, the “bear case” scenario — in which earnings per share for the top five insurers would decline an estimated one percent from 2010 through 2019 and the variance with current valuation is projected to be negative 36 percent.

Goldman estimates the chance of passing some form of health care reform at 75%, which I would guess is probably about right.

If Goldman is right, this means the CBO projections were way off, and Jon Walker’s evaluation of the impact of the public plan in the House bill is probably much more accurate.

Goldman claims that the report “was analytic not advocacy-based.”     Which might be somewhat believable were their “fantasy future bill” not included.  It’s hard to look at this as anything but advocacy on their part to apply political pressure to weaken and pass the Senate Finance Committee bill, because it’s highly unlikely that no health care bill will be passed.