Healthcare, Congress & WellPoint

House Speaker Nancy Pelosi has set a target of month's end to enact health care legislation, while in the Senate, Majority Leader Harry Reid hopes to complete legislation by the end of the first week in August.

However, progress towards clarifying the way forward remains cloudy with yet another setback in Congress on Thursday, when a key group of House Democrats demanded changes in legislation, claiming the emerging bill "lacks a number of elements essential to preserving what works and fixing what is broken." This followed concerns about a proposed new tax on generous health insurance benefits provided by some employers raised earlier in the week.

On a positive note for the government, leaders from hospital industry trade groups were expected to appear with Vice President Joe Biden to announce that hospitals are ready to give up about $155 billion over 10 years in government payments, with the money being allocated towards helping pay for covering millions of uninsured Americans. It remains to be seen whether the government will take a position by enacting the "public plan" option, however this week’s events suggest that given the complexity of issues being considered, legislation will not meet Pelosi’s targeted deadline for enactment.

We retain our neutral stance on managed care at this time, given the associated uncertainties. However, believe WellPoint (WLP - Analyst Report) remains attractive at current levels given its size and relatively diversified payor mix and maintain our Buy recommendation.