Related Experiment Video
Updated: Jun 15, 2026
13:04
Measuring the Subjective Value of Risky and Ambiguous Options using Experimental Economics and Functional MRI Methods
Published on: September 19, 2012
Public option and private profits: what do markets expect?
1Department of Economics, University of California, Irvine, California 92697-5100, USA. fmilani@uci.edu
Applied Health Economics and Health Policy
|March 6, 2010
Summary
The public health insurance option is expected to negatively impact private health insurers, reducing their stock returns. Market analysis suggests a potential 13% profit adjustment, not a collapse of the industry.
Area of Science:
- Health Economics
- Financial Markets Analysis
- Healthcare Policy
Background:
- The US healthcare reform debate centers on a public health plan option.
- Supporters anticipate increased competition, while opponents fear private insurer market collapse.
Purpose of the Study:
- To assess the likely impact of a public health option on the private health insurance market.
- To utilize financial market data for inferring market expectations.
Main Methods:
- Analysis of daily prediction market data (June 2009) on public option approval probability.
- Correlation of public option probability with stock returns of private health insurance companies and hospital companies.
Main Results:
- Health insurance stock returns significantly decreased with increased public option probability (10% probability increase led to 1.28% stock return decrease).
- Hospital company stock returns also showed a negative response (0.9% reduction).
Conclusions:
- Financial markets anticipate a negative effect of the public option on health insurance company valuations.
- Expected profit adjustments for insurers are around 13%, not indicating industry collapse.
Related Concept Videos
01:22Curve Sketching and Derivatives
Understanding the behavior of a function through its first and second derivatives is essential for analyzing its graph. Derivatives provide insight into where a function increases or decreases, where it attains local maxima or minima, and how its curvature behaves across different intervals.The first derivative of a function reveals the slope of the tangent line at any given point. Points where the derivative is zero or undefined are considered critical, as they often indicate potential extrema...
01:26Equity Theory
Equity theory explains how our sense of fairness influences the dynamics of close relationships. Rooted in social psychology, the theory posits that individuals evaluate fairness by comparing the ratio of their contributions to the rewards they receive. Relationship satisfaction is highest when these ratios are perceived as balanced between partners, promoting mutual reciprocity and a sense of justice.Equity vs. Equality in RelationshipsEquity is distinct from equality. Fairness does not...
01:13Sensitivity, Specificity, and Predicted Value
In healthcare diagnostics, laboratory tests play a crucial role in identifying and diagnosing a wide range of medical conditions. However, interpreting test results is not always straightforward. An abnormal test result does not always confirm the presence of a disease, just as a normal result does not guarantee its absence. To assess the reliability of these diagnostic tools, healthcare practitioners rely on two key statistical indicators: sensitivity and specificity.
Sensitivity is the...
Sensitivity is the...