And what place might that be? In the money, is where.
The notion that the ACA has finally reined in the cost of health insurance is naive. Private health insurers have been soaking people for generations and they are expert at gaming the regulations. The regulations and controls imposed by the ACA will be no exception, especially considering that the insurers helped to write the law. They are Obamacare's and Obama's ghost writers. Maybe that's what Palin meant by death panels.
I've said before here that if you have any doubt about the insurer's ability to make money even under the seemingly tough rules imposed by the ACA - e.g., taking people with preexisting conditions or limiting the medical loss ratio - just take a look at the price of their shares since the ACA went into effect. And now, the New York Times has noticed too.
... from the financial perspective of the health care industry, Obamacare, as the law is often known, doesn’t seem much of a hindrance.uh oh
In fact, it may even turn out to be positive.
Because they face new regulations intended to broaden coverage and limit profit-taking, some analysts have been concerned that profits will suffer. But in the run-up to the Affordable Care Act, stock market prices have told a different story.Let's talk understatement here. Stock prices don't beat the averages when holding your own is the expectation.
Over the last 12 months, shares of the top five publicly traded health insurance companies — Aetna, WellPoint, UnitedHealth Group, Humana and Cigna — have increased by an average of 32 percent, while the Standard & Poor’s 500-stock index has risen by just 24 percent.
Strong profits in the current year, as growth slowed in overall health care costs, is one probable explanation for the outperformance by the group.
Another is the growing expectation that payments from new customers required to buy insurance under the Affordable Care Act will offset costs from new regulations.
Mark T. Bertolini, the Aetna chief executive, said recently: “We continue to believe that public exchanges can represent a longer-term upside opportunity.”Yep, some good things for Americans, but the cake and the box it came in goes to the insurers. Yes, millions will be getting health insurance for the first time. How long the price of those policies are affordable is another question once the insurers get around to their old tricks. The same is true for how long the ACA will keep the growth in healthcare costs.
And most health insurers are forecasting earnings growth after the health care law is fully in effect.
David Cordani, Cigna’s chief executive, said his company’s average annual earnings per share would grow 10 to 13 percent over the next three to five years.
The ACA is not a step toward single payer health insurance. Just the opposite. The ACA has locked US health insurance into a private system for generations. With the government paying the private insurers what the people can't afford, why shouldn't Wall Street see health insurance companies as a good bet for the future.