Wootrader.com is moving to https://financeboards.com - sign up for a free account.

Healthcare


Going into the new year, health insurers are busy trying to prepare for changes to the Affordable Care Act along that could overturn all or part of the law. The potential impact on the health care industry is enormous.

At the same time pending mergers in the industry are receiving intense government scrutiny that threatens to upset plans to consolidate, something industry officials say is needed to give them clout in negotiating with hospitals and pharmaceutical firms.

Related: AT&T TIME WARNER DECISION GAINS MOMENTUM

ACA Overhaul Could Come Quickly

Republicans have long promised to overhaul or outright repeal the Affordable Care Act, otherwise known as Obamacare. The timeline is critical. Some say it could take several years. Others want parts of the law gone as soon as possible.

If enforcement of the individual mandate which requires almost all Americans to have health insurance goes away, insurers could lose many healthy policy holders who help pay for the sickest among us who also have insurance.

This “doomsday” scenario could result in most if not all insurers abandoning the individual marketplace according to many observers.

Outlook Optimistic For Some

Although companies and their investors are rightfully concerned about massive changes to the ACA, lawmakers are also aware that too much too soon could be very damaging. If government reaction is tempered and evenhanded, some companies, like UnitedHealth Group Inc. (NYSE:UNHC), could prosper.

UnitedHealth's shares are among the best performing big-cap health care stocks of the year. United is the largest health insurer in the United States and shares are up about 27% from the first of the year.

One reason for continuing optimism moving forward is the potential positive impact of UNH’s Medicaid segment. Analysts feel Medicaid could help make up for losses in the individual market segment.

Furthermore, UNH pays a hefty dividend, a real plus for income investors.

On The Merger Front

Others in the industry, including Aetna Inc. (NYSE:AETC), Humana (NYSE:HUMC), Anthem Inc. (NYSE:ANTMC) and Cigna Corp. (NYSE:CIC) are in the midst of arguments related to two separate mergers the companies say are needed in order for them to survive.

Should both mergers be successful, more than 125 million Americans would get their health insurance from just 3 companies. Federal regulators and critics say such consolidation would not be good for consumers.

The companies argue that bigger is better and allows them to be more efficient. They say the clout that comes with size would let them strike deals with hospitals and doctors to help lower prices which they would pass along to consumers.

Related: AN INTRO TO FINANCEBOARDS

The Battle Continues

In both merger cases, federal judges will have to decide who is right. The question is simple, but potentially costly if the decision turns out wrong - will consolidation be better for consumers or worse?

Regarding the impact of Obamacare repeal or tinkering, the solutions there are also significant. Add to that discussion of a possible privatization of Medicare, and the number of people affected suddenly gets much larger.

Along with the real impact on individuals, there is also the impact on investors who will continue to watch developments moving forward.



Get Started For Free