The uncertainty created by the Clinton administration's announced health-care reform plan has created substantial turmoil in the stock market, with shares of drug companies, insurers, and other firms servicing this $840 billion sector of the economy trading down substantially since the start of the year.

To date, investor interest has focused almost exclusively on the equity markets. Yet to the extent that the Clinton plan places new financial burdens on hospitals, and on the states themselves, it will also have a significant impact on the market for tax-exempt debt. This impact, while generally acknowledged, is difficult to quantify and, perhaps as a result, has not yet been discounted by the municipal markets.

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