Some people on the left have claimed passing health care will not hurt them in the 2010 midterms, because the damage in public opinion was already done. The prediction markets seem to disagree.
As the probability of health care passing went from 40% in the beginning March to close to 100%, the probability of Republican taking congress went from 42% in to 48% as of writing. Since the market's already calculated some probability of health care passing at this point, the marginal increase from the bill is 6/0.6=10% points.
Especially on Sunday there was heavy trading in the probability of republicans re-taking the house around the time the Stupak deal was announced.
Going by the results on Sunday, a 15% increase in the probability of heath care passing translated into a 2% increase in the probability of Republicans winning the house, implying that health care led to a 2/0.15=13% higher chance of Republicans taking over the house.
Some admit that passing health care was bad for congressional Democrats, but necessary for Obama. However the probability that Obama is re-elected did not increase from March to now, nor did it change on Sunday. If anything it went down a little.
The Democrats are still favored to hold the house. But if we believe the prediction markets (which I always do), passing health care has made it around 10% points more likely that republicans will take over the house.
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