Obama "demonized insurers several times but didn't add anything new to the debate," Wells Fargo analyst Matt Perry said in a research note. "Overall we view the speech as neutral to insurers."Wall Street is betting on a toothless plan that will do nothing to stop the insurance giants, and seems to think that Max Baucus is running the show himself.Shubitz said Obama's plan resembled the framework proposed earlier this week by Senator Max Baucus, head of the powerful finance committee, indicating that Baucus' formal bill would be crucial for investors to watch.
"It's very clear that this is the route they're going to use to get something out there," Shubitz said.
Obama made his case for a public health plan that he said would lead to more competition in the private market. The controversial public plan idea has prompted fear from investors that companies would be unable to compete against it and eventually beget a government takeover of healthcare.
Obama said he had "no interest in putting insurance companies out of business" and would remain open to other ideas to ensure Americans have an option to secure affordable coverage.
Ana Gupte, a Sanford Bernstein analyst, said in a research note she was "even more confident after the Obama speech that the legislative outcomes will be moderate with no threat of a Medicare-like public plan." Analysts noted that Obama remained open to other ideas aside from the plan, such as nonprofit cooperatives that are seen as less threatening to the industry.
"While we understand the negotiating logic of keeping it on the table for now, we still don't see any higher/better odds that a full fledged public plan can ever make it into a final piece of legislation," JP Morgan analyst John Rex said in a research note.
Anyone willing to bet against that sentiment?
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Since Obama threatened to veto a bill that raises costs but failed to make a similar threat in regard to a bill without a public option, I'd say the bets on Baucus are sound.
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