Consider Two Potential Winners of Obamacare

NEW YORK ( TheStreet) -- Do you like the heath care sector as an investment theme in 2013 and beyond?

Even if you're ambivalent about Obamacare or totally opposed to it, some version will become law in 2014. Love it or hate it, it has the potential to boost health insurance stocks in a big way going forward.

Even though the government is in shutdown mode as I write, on Oct. 1 the government-subsidized health insurance exchanges and state insurance exchanges were scheduled to come online.

Little is known yet concerning how many uninsured Americans will pay a large percentage of their disposable income to buy health insurance through the insurance supermarkets called "exchanges."

According to one survey sponsored by Citigroup ( C), the number of people who may initially sign up could be as high as four million.

Time will tell. What we do know is that there's an overlooked form of insurance that's been going on for years. It's called Medicaid, and it's a government-sponsored health plan for the economically challenged. More than 29 million Americans have their Medicaid benefits managed by private insurers.

Medicaid is in the midst of its biggest growth spurt since it was created back in the 1960s. It provides a huge amount of revenue for insurance companies that specialize in Medicaid and also in Medicare.

Two of the major players in this lucrative business arena are Molina Healthcare ( MOH) and WellCare Health Plans ( WCG).

Molina manages Medicaid coverage in several states, including California, Florida and Illinois. Medicaid is the state and federally funded program that provides health coverage for the poor and disabled people in most states.

Molina is a shareholder-friendly company as well. On Oct.3 the company announcedits board has approved a plan to buy back up to $50 million of the company's stock.

The Long Beach, Calif., company's repurchase became effective Sept. 30 and extends through the end of the year. It will be funded by existing cash.

This acts like a no-tax, stealth dividend for shareholders because stock buy backs tend to make the outstanding shares dearer and gooses the price higher. Unlike a regular dividend, it's a tax-free benefit.

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