Last month, Goldman Sachs put together an analysis of health care legislation that took a look at what types of reform would be best for the insurance industry’s bottom line. The predictable answer? No reform at all.

A study put together by Goldman in mid-October looks at the estimated stock performance of the private insurance industry under four variations of reform legislation. The study focused on the five biggest insurers whose shares are traded on Wall Street: Aetna, UnitedHealth, WellPoint, CIGNA and Humana.

The Senate Finance Committee bill, which Goldman’s analysts conclude is the version most likely to survive the legislative process, is described as the “base” scenario. Under that legislation (which did not include a public plan) the earnings per share for the top five insurers would grow an estimated five percent from 2010 through 2019. And yet, the “variance with current valuation” — essentially, what the value of the stock is on the market — is projected to drop four percent.

Things are much worse, Goldman estimates, for legislation that resembles what was considered and (to a certain extent) passed by the House of Representatives. This is, the firm deems, the “bear case” scenario — in which earnings per share for the top five insurers would decline an estimated one percent from 2010 through 2019 and the variance with current valuation is projected to be negative 36 percent.

What the firm sees as the best path forward for the private insurance industry’s bottom line is, to be blunt, inaction.

The study’s authors advise that if no reform is passed, earnings per share would grow an estimated ten percent from 2010 through 2019, and the value of the stock would rise an estimated 59 percent during that time period.

Jane Hamsher thinks this is an effort to pass the Senate Finance Committee’s bill, as killing health care reform entirely is not seen as a likely scenario in the document (Goldman predicts a 75% chance of passage). But Goldman also adds a “bull case” scenario – that is, the SFC bill, only changed further to be friendlier to the industry (stronger individual mandate, weaker regulations and weaker community rating, for example) – and to Jane, this shows that Goldman made as much an advocacy document as an analytical document. That is, they gave the industry exactly the information they needed to lobby on the bill.

Quite simply, this is a gift for supporters of reform. Goldman Sachs has maybe the worst corporate image in America, universally scorned for their role in nearly busting the global financial system while profiting shortly thereafter. Reformers could only wish of having their name attached to health care reform. Now, it is.

The other takeaway from this report is that Goldman sees a much bigger role for the public option than the CBO does. That’s the major change between the House and SFC bills, and there’s a massive difference to the insurance industry’s bottom line between the two.

With 15-30 million customers, the public option would be one the largest insurance companies and would have the ability to really force the rest of the marketplace to reduce premiums. Goldman Sachs agrees that it would really push down profits. This is what really terrifies the private insurance companies, and it is why they are so strongly fighting against the public option. They would be subject to many new regulations, and a majority of their promised 36 million new customers will choose the public option. When it comes to determining if the public option will succeed, I recommend listening more to Wall Street’s analysis than the CBO’s.

It remains to be seen whether reformers will start using Goldman Sachs in their rhetoric.