The results reveal the market expectation of a negative effect of the public option on the value of health insurance companies. The magnitude of the effect suggests a downward adjustment in the expected profits of health insurers of around 13%, but it does not support more calamitous scenarios. </AbstractSection>...

Background: The debate on US healthcare reform has largely focused on the introduction of a public health plan option. While supporters stress various beneficial effects that would arise from increased competition in the health insurance market, opponents often contend that a public plan would...