Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

WellPoint, Inc. (WLP), UnitedHealth Group Inc. (UNH), Aetna Inc. (AET), & CIGNA Corporation (CI): Is Obama’s Home State Balking at Obamacare?

Page 1 of 2

The first full week in June ended with Illinois lawmakers again failing to send Gov. Pat Quinn a bill outlining a state-run marketplace to sell health insurance in accordance with the Affordable Care Act, more commonly known as Obamacare. While the marketplace will still open for business later this fall, the control of the marketplace for Illinois residents is the issue in question. The governor wishes to partner with the federal government for 2014, but he had hoped that the state would take control for 2015 and beyond. If some resolution isn’t reached quickly, control will probably remain in federal hands for quite some time.

Given the interplay between federal- and state-run marketplaces, it’s unclear what impact this development — and those like it in other states — will have on the major health-insurance providers, but most have already made clear that they’ll enter a limited number of markets. That outcome could ultimately mean that states relying on the centralized federal option will be able to offer more choices, simply because the insurance companies aren’t racing to join state systems. When these markets go live in October, the participation of the major players will probably have a significant impact on the respective stocks.

WellPoint, Inc. (NYSE:WLP)

The position of the companies
According to a recent story from Reuters, the largest insurance companies have been cagey about their interest in becoming deeply involved with Obamacare marketplaces. Here’s a summary.

  • WellPoint, Inc. (NYSE:WLP) : The insurer that runs 14 Blue Cross Blue Shield state operations said it will join in those states, but it has no specific plans to extend its reach into new markets.
  • UnitedHealth Group Inc. (NYSE:UNH) : The country’s largest insurer has remained especially vague on the number of systems in would participate in — placing the number somewhere between 10 and 25. Interestingly, the company is not likely to participate in its home state of Minnesota, because for-profit insurers are not permitted there. Minnesota offers an example of how each of the different states poses unique issues.
  • Aetna Inc. (NYSE:AET) : The insurer reported submitting 14 applications, but like WellPoint, Inc. (NYSE:WLP), it said it had no plans to use the exchanges as a vehicle for expansion or a “land grab.”
  • CIGNA Corporation (NYSE:CI) : Fourteen seems to be the magic number for applications, as this insurer also reports that it will be involved in that many states. While CIGNA Corporation (NYSE:CI) is also trading near its own 52-week high, the stock offers a dividend yield of only 0.10%. Given the significant run the overall market has experienced, the downside protection from other options is preferable.

Central to the concerns of all of these companies is ongoing uncertainty over how many plans they’ll be allowed to offer, what pricing parameters may be placed on pricing and benefits, and what costs may be involved in participating in various systems. The appeal for the states of creating their own exchanges is that they’ll then be able to set more of the rules that the insurers must abide by and honor.

While the government believes that the exchanges offer the appeal of lower administrative cost to the companies, the limitations are hard to fully predict until the systems go live. One obvious issue for the system is that states that currently have very limited offerings may not see any significant uptick in options. While an obvious solution would seem to include offering all options of the federally run site to residents of all states that participate therein, the regulations and limitations that govern the industry would mean another major overhaul to the law to allow that situation to occur.

The Illinois situation
The wrangling afoot in Illinois seems to be typical of many states, including those seen to be the most supportive of President Obama. The battle lines in the Illinois State Legislature are being drawn between those who want a state-run system and the influence of the insurance companies. Illinois has already passed another important part of the law, in the form of an expansion of Medicaid to cover the bulk of low-income individuals without insurance; the U.S. Supreme Court made the option in an earlier decision. Ultimately the path of Illinois is more symbolic than critical to Obamacare, but it will probably continue to get attention, since it’s the president’s home state.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!