Barron's: Brighter days ahead for WellPoint

Back to TopCommentsE-mailPrintBookmark and Share

It’s been a tough year for major health insurers, but Barron’s magazine predicts a big comeback for Indianapolis-based WellPoint Inc. and its rival, Minnesota-based UnitedHealth Group.

Barron’s writer Johanna Bennett writes that both companies are poised to roll up or steal market share from the roughly 1,200 smaller rivals that do not have the “enormous scale” needed to thrive in the lower-profit environment the new health law will create.

"It is going to be a very Darwinian situation," Scott Richter, a portfolio manager with Cincinnati-based Fifth Third Asset Management, told Barron’s. "Size and scale will win out and create a new playing field."

WellPoint’s stock price has swooned 16 percent since President Barack Obama signed the new Patient Protection and Affordable Care Act into law on March 23. The law requires health insurers to take all comers, no matter how sick, and requires them to devote at least 80 percent of premium income to medical care, not overhead or profit.

Enrollment in health insurance plans should surge in 2014 thanks to the new law’s mandate that all Americans buy insurance. Barron’s reported that Credit Suisse analyst Charles Boorady expects total revenue in the health insurance industry to increase by a third, to $795 billion, by 2019. Profits should rise a tidy 8 percent annually during that time.

WellPoint’s 33 million health plan customers and strong Blue Cross brand names should help it draw a better-than-average portion of that growth.

"If you look down the road a few years, these big companies like United and WellPoint could be generating some pretty healthy cash flow," Jason Nogueira, an analyst with T. Rowe Price, told Barron's.

You can read the Barron's story at this website, although it requires a subscription to access.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.