Will These Obamacare Supporters Get Burned? UnitedHealth Group Inc. (UNH), WellPoint, Inc. (WLP), WellCare Health Plans, Inc. (WCG)

Page 1 of 2

Will investors viewing Obamacare as a boon for health insurers regret their enthusiasm? Only time will tell if the law pays off for these companies, but recent developments suggest that some of health reform’s purported benefits could be smaller than expected.

The backstory
In the summer of 2012, the Supreme Court of the United States upheld the Affordable Care Act, with the only limitation being that states would reserve final say on whether to expand their Medicaid programs. But with the federal government committed to paying for the initial Medicaid expansion, it was clear at the time that most states would take advantage of the chance to expand coverage at no incremental cost. So, with the law upheld and set to take effect in 2014, insurance companies began planning their strategy to capitalize on a wave of newly insured Americans.

UnitedHealth Group IncIn a little over a month, two multibillion-dollar deals were announced. WellPoint, Inc. (NYSE:WLP) announced the acquisition of Amerigroup in June, and Aetna Inc. (NYSE:AET) followed up in July with news that it was acquiring Coventry Health Care, Inc. (NYSE: CVH). Both targets were seen as particularly attractive due to their large Medicaid and Medicare businesses, certain to grow because of Obamacare’s Medicaid expansion and an ever-growing population of senior citizens.

About that expansion…
Despite the “free” federal money backing Medicaid’s expansion to 138% of the federal poverty level, not as many states as you might think are planning to take advantage. According to a report from The Advisory Board Company, as of the beginning of March more than half of states are either undecided on or against expanding the insurance program. While there is still plenty of time to play political hardball before 2014 hits, recent developments should have Medicaid-heavy insurers like WellCare Health Plans, Inc. (NYSE:WCG), Molina Healthcare, Inc. (NYSE:MOH), and Centene Corp (NYSE:CNC) at least a little concerned.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!