Will Obamacare Stop Health-Insurer Stocks in Their Tracks?

TL;DR

Health insurance stocks have experienced significant gains recently, attributed partly to Obamacare, but also due to lower healthcare spending and expansion into other markets. However, the upcoming launch of health insurance exchanges has caused uncertainty among investors.

Transcript

hey fools I'm Max Macaluso and there's still a lot of uncertainty around Obamacare now to shed light on this topic joining me today is director of investment planning Dan kaplinger hi Dan hey Max how are you so Dan Health insures have been preparing for ObamaCare for a long time stocks are up huge in the last 12 months but down recently do do you t... Read More

Key Insights

• 🧑‍⚕️ Health insurance stocks have performed well in the past year, but the gains are not solely attributed to Obamacare.
• 🧑‍🏭 Factors such as reduced healthcare spending and expansions into other markets have contributed to the growth.
• 🧑‍⚕️ The upcoming launch of health insurance exchanges has caused uncertainty among investors.
• 🥡 WellPoint has been aggressive in participating in the exchanges, while other companies are taking a more cautious approach.
• 🧑‍⚕️ The overall impact of Obamacare on health insurance profits is still uncertain.
• 🧑‍⚕️ Health insurance companies are diversifying their profit streams to reduce reliance on Obamacare.
• 🧑‍⚕️ The success of health insurance stocks will depend on the performance of the health insurance exchanges.

Questions & Answers

Q: How have health insurance stocks performed in the past year?

Health insurance stocks have risen significantly, with United Health and WellPoint experiencing gains of 30% and 40% respectively. Other insurers like Sigma and Etna have seen even larger gains.

Q: What factors have contributed to the increase in health insurance stocks?

Lower healthcare spending by consumers, higher deductibles and co-payments, and scaling back on medical expenses during a tough economy have all helped boost profits for health insurance companies.

Q: How are health insurance companies planning to drive growth in the future?

Health insurance companies are looking to capture more of the Medicaid market through acquisitions. United Health is focusing on Pharmacy Benefit Management and Health Management Consulting Services to diversify its profit streams.

Q: What is causing uncertainty among investors in health insurance stocks?

The upcoming launch of health insurance exchanges, both state-run and federally-run, has created uncertainty. Companies like WellPoint are aggressively participating in the exchanges, while others like United Health and Sigma are taking a wait-and-see approach.

Summary & Key Takeaways

• Health insurance stocks have seen substantial increases in value in the past year, with companies like United Health and WellPoint experiencing significant gains.

• Factors contributing to these gains include lower healthcare spending by consumers, higher deductibles and co-payments, and scaling back on medical expenses during tough economic times.

• Health insurance companies are also looking to expand into other markets, such as Medicaid, to further drive growth.