NEW YORK (TheStreet) -- The Covestor Healthcare Model predicted that the implementation of the Affordable Care Act would be good for health care stocks because Americans previously lacking health insurance would join the ranks of the insured. Contrary to some observers, who had predicted that Obamacare would be a disaster, the Covestor Healthcare Model anticipated that this would be a job-creator and a business stimulus badly needed in an economy still weak following the financial crisis of 2008.
Let's take a look at some of the companies that have benefited from Obamacare and are likely to continue to do well. The Affordable Care Act sets up prescription drug coverage and encourages generics in order to minimize costs. One of the successful holdings in the Healthcare Model is Actavis (ACT) , which recently outbid Valeant (VRX) for Allergan (AGN) . Actavis is the third largest generic pharmaceutical company in the U.S.
One of the foundations of the broadening of health care coverage under Obamacare was the expansion of Medicaid that was initially required under the ACA. It became a voluntary decision by the states after a ruling of the Supreme Court. As of November 2014, 28 states (including the District of Columbia) have accepted federal funds for Medicaid expansion. It is estimated that 6 million people have been added to Medicaid since Obamacare was initiated. This brings Medicaid enrollment to about 65 million Americans, and work of managing these patients also creates investment opportunities for the Healthcare Model.
Centene (CNC) is involved in managing Medicaid patients for state organizations and has been a top stock performer in the Covestor Healthcare Model. It should continue to do well as Medicaid is likely to grow further as cost pressures drive more states to accept federal funds offering coverage for these liabilities.
Another feature of Obamacare has been the encouragement of Electronic Health Records to replace much of the paper charts of the past. This allows for quicker and more efficient billing and documentation and the sharing of data between providers and insurers to expedite health care and reimbursement. McKesson (MCK) , a top holding in the Covestor Healthcare Model, is a top Electronic Medical Record Company in the U.S.