This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Here's Why the Roof Hasn't Caved in on Health Insurers Under Obamacare

NEW YORK (TheStreet) -- If you listened to lobbyist predictions about the Affordable Care Act and sold the health insurers when the act was passed in 2010, you may be spitting out your corn flakes today.

If you listened to what I wrote in October, on the other hand, you're probably smiling.

All of the largest health insurance companies continue to do well. UnitedHealth (UNH - Get Report) is just the latest to report earnings, and this month represents the first batch of earnings to come out reflecting results from the Obamacare exchanges.

Yellen's Dilemma Is Getting People Used to Perpetual Uncertainty

Buying Bluebird's Blockbuster Potential at a Discount

For the quarter ending in June, UnitedHealth reported revenue of $32.6 billion with net earnings of $1.4 billion, or $1.42 per share. The forecast of 16 analysts following the stock was for earnings of $1.25 per share. At around $85.60, share are up nearly 14% for the year to date.

UnitedHealth shares had already been gaining before earnings despite a recent downgrade from Jefferies. 

Over the last five years investors have gained 128% on shares of WellPoint (WLP), 281% on Cigna (CI), 218% on Aetna (AET), 241% on UnitedHealth and a whopping 354% on Humana (HUM).

What happened?

From a financial point of view the law has done what it promised. It brought in new customers, creating a new individual insurance market, and led to the creation of policies with big incentives for both insurers and patients to hold costs down.

The most-popular "silver" plans sold on the exchanges still have patients footing 20% of bills. That's an incentive for them to avoid unnecessary tests and procedures. It also makes it profitable for insurers to provide wellness services and to be proactive regarding chronic conditions like diabetes and hypertension, which can be managed profitably through medication.

Hospitalizations, in other words, now cost both patients and insurers a lot more than actions that prevent hospitalizations.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
UNH $120.21 0.49%
AAPL $130.28 -1.14%
FB $79.19 -1.19%
GOOG $532.11 -1.42%
TSLA $250.80 -0.26%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs