While the ‘compromise’ over the debt ceiling was being shouted over, many analysts noted that the world’s stock markets were, at most, simply unnerved. They were not panicked because investors were confident that some kind of deal would be found and default was not really going to happen. What kind of deal drawn up to avoid the default was less important to them than that a deal would be done.
Yet, rather more quietly behind the overall market indexes most of us pay attention to, stocks for nursing-home companies and their service providers have taken a real hit over the last week. What has spooked investors in elder-care services, if the default has been avoided and Medicare was not expressly cut by the deal?
As we noted last week, The Centers for Medicaid and Medicare has already announced its own efforts to trim at least $4 million from its budget in an effort to realign billing procedures and trim waste. Now The Wall Street Journal is reporting (subscription required to read the whole story) that, along with these internal measures, investors are worried that the debt-ceiling deal has triggers that will go after Medicare early next year, when we go through this whole process again.
The following video outlines the report in the WSJ about what has happened to elder-care stocks over the last week or so, and what might still be coming for the companies that issue them:
What makes this story worth following (besides anyone’s investments in such companies and service providers), is that investors are terribly twitchy about losing their profits, and – like canaries in coal mines – they are quick to sense danger and try to escape. If they see reason to sell off elder-care stocks now for what they see coming in 6-8 months, they will create a self-fulfilling prophecy: The stocks will lose value and care companies will struggle to pay bills. The stress these companies will be under will become fodder for Tea-Party types to argue how ‘broken’ Medicare is. Any investors still left will sell off as fast as they can, ‘proving’ argument of the far right.
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