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WellPoint, Inc. (WLP), Arena Pharmaceuticals, Inc. (ARNA): Does This Data Overwhelmingly Prove That We Need Obamacare?

Regardless of whether you’re entirely for the Patient Protection and Affordable Care Act, vehemently against it, or fall somewhere in between, it’s set to become the law of the land on an individual basis in less than five months.

Public opinion on the highly controversial law, known also as Obamacare, has been swinging decisively toward pessimism in recent months, with the Kaiser Family Foundation’s most recent poll demonstrating that there are twice as many people who have a “very unfavorable” view of the law as opposed to those who have a “very favorable” view (30% versus 15%). Add on the almost incalculable human and technological effort that’s going to be needed to meld the cloud-based technology and educational aspects of this bill and you have countless reasons for uncertainty from citizens.

The spark Obamacare needs However, data from a recently released Gallup poll may provide some of the spark needed to fuel the fire for Obamacare. The Gallup poll in question examined the correlation between the Gallup-Healthways Well-Being Index — a measure of health that includes factors such as access to health care, emotional and physical health, a person’s work environment, and their physical behaviors — and the incidence of heart attacks. The findings confirmed that metros in the bottom 10% of the Well-Being Index had a two time greater risk of having had a heart attack at some point in their lives than the top 10% of the Well-Being Index — 5.5% versus 2.8%.

To some of you, this might be a bit of “Duh!” moment — and you’re partly right… it is! If the overall Well-Being Index for a metro is lower because of unhealthy personal habits and a tough socioeconomic environment, it probably isn’t surprising to see heart attack rates track higher in these regions as well. But, out of the multiple factors that go into calculating the Well-Being Index, only two have dropped since 2008: work environment and health care access!

WellPoint, Inc. (NYSE:WLP)Where Obamacare could play a big role The big one that I would focus on here is access to health care, which can be difficult to get for lower income individuals who sometimes desperately need that care. Lower-income individuals naturally have fewer food choices at their disposal, which leads to numerous unhealthy eating habits. Similarly, depression rates tend to be higher among lower income individuals which can also encourage poor health habits.

Obamacare intends to fix this by expanding government-sponsored Medicaid to some 16 million people that currently don’t qualify for it. In addition, individuals that make up to four times the national poverty level could be eligible for up to some form of subsidy with regard to their health insurance premium. By drastically improving access to health care for these millions of Americans, it’s expected that overall well-being will rise.

Another factor to keep in mind here is that most Americans get quite a bit of their health advice from their doctor. Another recent Gallup poll released last week looked at how often respondents said their doctor discussed with them the benefits of exercising regularly or eating a healthy diet. The poll results showed that 71% of physicians discussed exercise with patients and another 66% discussed the benefits of a proper diet. There’s no doubt in my mind that doctors are one of the greatest health influences out there, so if we can get more people to go to the doctor, they are more liable to follow the advice of their physicians and try to exercise more and eat healthier.

Which stocks might benefit? Looking at this from an investment perspective, there are a lot (and I really do mean a lot) of potential winners under the proposed Medicaid expansion. As long as the U.S. government is able to effectively spread awareness of health care access to the public that qualifies for it, the result should be expanded doctor visits and a probable boost in business for everything from insurers to certain types of restaurants.

The obvious beneficiary here would be hospitals in general and insurers that rely heavily on Medicaid-based members. The insurer I’ve turned to on multiple occasions that’s very eager to see the individual mandate go into law is WellPoint, Inc. (NYSE:WLP), which purchased Amerigroup last year to become the nation’s largest Medicaid-based health-benefits provider. Even with a medical loss ratio cap of 80% and the fact that Medicaid-based members may come with lower margins than members who pay for their own deductible, the sheer number of new members that should be introduced into its Blue Cross Blue Shield plans should provide a big bump to its bottom line profits.

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