Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance

PPACA pays off for insurers

Your article was successfully shared with the contacts you provided.

(Bloomberg) — U.S. health insurers that helped fund a campaign against ‘Obamacare’ — the Patient Protection and Affordable Care Act (PPACA) — hit an all-time high on the stock market Wednesday after UnitedHealth Group Inc. (NYSE:UNH) said it would add hundreds of thousands of new customers because of the law.

See also: The PPACA watcher’s earnings release calendar.

The Standard & Poor’s 500 Managed Health Care Index — which includes the five biggest U.S. insurers — closed at 1,031.18, the highest level since at least 1994. Health insurers have said that PPACA has cost them billions in taxes and fees — including $1 billion in 2014 for UnitedHealth — and burdened them with new regulations.

PPACA requires all Americans to have health insurance. To do so, it created marketplaces for people to buy coverage, often with subsidies, and expanded Medicaid, the joint federal-state program for the poor.

That’s meant millions of new customers. Questions remain about how profitable about the customers will be in future years, but, for now, investors are looking mainly at the enrollment numbers.

“We got something like 15 to 16 million people through those two channels, and about 10 million people were previously uninsured,” said Ana Gupte, an analyst at Leerink Partners. “That’s new growth that this industry never experienced before.”

The industry was one of the law’s biggest opponents. While health insurers have worked with Democrats on the law’s implementation since its 2010 signing, in 2009 they secretly funneled $86.2 million to the U.S. Chamber of Commerce to fund a political campaign to oppose the law. Since then, the industry has publicly said it supports the law and wants implementation to be successful.

After reporting results today, UnitedHealth reached its highest price ever, closing at $109.32. Chief Executive Officer Stephen Hemsley said the company had increased revenue and profit “despite material and well-documented burdens from PPACA.

Shares triple

UnitedHealth shares have more than tripled since April 2010, the month after the law was passed, compared with a 72 percent gain in S&P 500. Aetna Inc. (NYSE:AET), Anthem Inc. (NYSE:ANTM), Humana Inc. (NYSE:HUM) and Cigna Corp. (NYSE:CI) all also hit record highs Wednesday. Together, the companies make up the biggest for-profit insurance providers in the industry.

The U.S. Department of Health and Human Services (HHS) said today that 7.1 million people have used U.S.-run marketplaces in 37 states.

“The ACA took steps to reduce the number of uninsured in this country; that’s a good thing,” said Cynthia Michener, an Aetna spokeswoman. “But we have a lot more work to do to improve quality and cost.”

Clare Krusing, a representative for America’s Health Insurance Plans (AHIP), declined to comment. Representatives for other insurers on the index either didn’t immediately respond to requests for comment, declined to comment, or referred to previous statements supporting the law.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.