James Pethokoukis

From superanalyst Dan Clifton of Strategas Research:

Should the Senate Finance Committee reach an agreement, the plan will likely take the form of an $800bn package inclusive of: a) an individual mandate; b) an employer mandate and a state based cooperative; c) insurance reforms such as guaranteed issue and community rating; d) a health insurance exchange subsidized up to 300 pct. of the poverty limit; and, e) an expansion of Medicaid in the range of 125 to 133 pct. of the poverty line. Notes – The health insurance exchange (part d) and the expansion of Medicaid (part e) are key to getting coverage, but also carry the highest cost – rendering them vulnerable to potential delays in program and eligibility implementation.

David Rosenberg of Gluskin Sheff doesn’t think so:

Much is being made of the fact that over 70% of U.S. companies are beating their low-balled earnings estimates, but the majority are still missing their revenue targets (as per Verizon and Honeywell in yesterday’s reports — top-lines down 6.7% and 22% respectively). Even so, a momentum-driven market will always be driven by just that — momentum; and there’s no doubt that investor risk appetite is being whetted. But after paying for the end of the recession in May, the market is now pricing in 40-50% earnings growth for next year, and while costs have aggressively been taken out of the system, this sort of unprecedented profits revival can only occur in the context of a V-shaped recovery, which we give 1-in-50 odds of occurring.

A Capitol Hill source tells me that a public healthcare option is dead, dead, dead in the Senate and thus dead overall. While some healthcare reform proponents hope to use the August recess to rally support, more likely it will be that the Dems will be telling the troops and interest groups that if you want some kind of healthcare bill, give up pushing for a public option. At this point, it is a waste of time, energy and money. But this does not mean Dems still might not push through some pretty big changes. As another source put it:

We might end up seeing something similar to what we chatted about before (individual mandate, highly regulated insurance market, major subsidies).  I see this as mostly a symbolic victory, as the Dems can get most of what they want without calling it a public option, frankly. Pretty close (to the Massachusetts model), I’d assume.

Ben Bernanke isn’t just campaigning for his own reappointment — though that certainly is part of what’s going on. He is also bolstering the public image of the Fed, which could use some help: