President Barack Obama's proposed
took no prisoners last week.
The president's plan, which could boost competition among insurers, pushed the Dow Jones U.S. Health Care Providers index down 10% on Thursday, the worst industry decline that day.
lost 20% while
dropped 13% and
Obama's reform program targets Medicare Advantage plans, through which 11 million senior citizens receive medical and prescription drug benefits. Reimbursements to companies that administer these plans are 15% higher, on average, than those for comparable Medicare services. The new administration aims to save $175 million over 10 years by requiring insurers to bid to participate in the plans.
before buying shares of these companies, including the five on the accompanying table. These stocks received overall grades in the C range, the equivalent of a "hold" recommendation.
Even before the president's budget was made public, TheStreet.com Ratings gave four of these stocks D-range risk grades on a scale of A-plus to E-minus. The lone exception,
, had a C-minus mark, one step from "very cautious" territory.
The stocks have been trading at less than 10 times earnings expected by analysts this year. In light of Obama's proposals, investors should look hard at the companies' higher-than-average risk grades.
to find out how Obama's plan affected exchange-traded funds.
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.