IBJNews

Health insurance stocks flop after Obama wins second term

Back to TopCommentsE-mailPrintBookmark and Share

Health insurance stocks sank deeper than the broader market Wednesday after President Barack Obama's re-election helped clarify the future of his health care overhaul, a sweeping law that some investors fear will pinch profits in the coming years.

The overhaul aims to cover millions of uninsured people. While that means new business for insurers, the law also imposes fees and coverage restrictions on the sector.

Starting in 2014, insurers will have to pay annual fees that total $8 billion that year and then climb to top $14 billion by 2018. The law restricts how much insurers can vary their pricing based on factors such as age and health—key tools they use to ensure that they have enough to cover medical claims.

It also stipulates, among other things, that insurers spend certain percentages of the premiums they collect on care, or pay rebates to customers.

Insurers like Indianapolis-based WellPoint Inc., with large portions of their business in the individual and small employer group markets, are expected to be affected the most by the fees and restrictions.

WellPoint's third-quarter earnings trumped Wall Street expectations, but the health insurer's stock tumbled after the election. Shares of WellPoint dropped 5.5 percent, or $3.35, to close at $57.85 Wednesday. Share were down 1.6 percent Thursday morning, to $56.91.

Investors also worry about online exchanges that will be set up as part of the overhaul to help people compare and buy insurance policies. Morningstar analyst Matt Coffina cites concerns that these exchanges will take customers from the more-profitable employer-sponsored coverage market.

The overhaul also cuts funding for Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled. That could pressure profits for companies like Humana Inc., for which Medicare Advantage plans make up a large concentration of its business.

Other health insurers saw their stock drop Wednesday. Humana's stock sank 7.5 percent, or $5.75, to $70.41 per share. Shares of UnitedHealth Group Inc., the nation's largest insurer, dropped 3.5 percent, or $1.99, to $54.40. Aetna Inc. fell 3.6 percent, or $1.61, to $42.95.

The Standard & Poor's 500 index, meanwhile, was down about 2 percent.

Cigna Corp.'s stock dropped only 21 cents, to $53.12. Analysts see Cigna as being less vulnerable to reform, since it has a broader business portfolio than most of its competitors. That includes a growing international business.

ADVERTISEMENT

  • issues
    i agree healthcare needs a major overhaul, but saying healthcare is free and gov provided like obamacare is way off base. obamacare is going to destroy job growth. Also find it ironic that everywhere else its provided and BEST way to do things but for some reason people from other countries always seem to come to America to get proper care. Canadians love coming to America to get care instead of waiting 8 months for MRI.
  • don't thank Obama...
    ...thank Anthem for giving you crappy insurance while raising your rates over and over and over so they can continue to profit from others suffering...the BEST way to provide health care to ALL is universal single payer health insurance, it works everywhere in the world better than the US and costs LESS!
  • ACA
    Terry, my "rebate" check was $22. You were saying ...?
  • RJR - Read the ACA
    Suggest you read the Affordable Care Act. We received a rebate check this year, as promised by the Affordable Care Act. We received our coupon payment book for 2013, and our rates have declined for 2013. The best parts of the Affordable Care Act are the removal of the pre-existing condition clause, which allows us the option of shopping the market for better rates, and the removal of the lifetime cap. We have friends with college age children and they are very happy with the fact that their children can stay on their plan, even after graduation. Read the ACA, then ask yourself why the CEO of WellPoint needed to be paid $15 Million a year? The answer: Because profits were created by gouging the general public with higher than needed insurance premium fees. Ask your friends if they received their rebate checks yet.
    • health insurance flops
      Thanks Obama for giving us crappy third rate insurance

      Post a comment to this story

      COMMENTS POLICY
      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
      ADVERTISEMENT

      facebook - twitter on Facebook & Twitter

      Follow on TwitterFollow IBJ on Facebook:
      Follow on TwitterFollow IBJ's Tweets on these topics:
       
      Subscribe to IBJ
      1. Uh, sorry Johnnie, but you are incorrect. Despite the assertions by yourself and various defenders and captains, sports attendance is NOT off significantly at most sporting events in the US. Variances in attendance has been in the range of single digits, both + & - for years now. MLB has had most of its best overall attendance nubers in the last decade, and that trend has been consistent for most major sporting events. The number one issue cited by most fans when asked about attendance is the overall cost of attending. The presence of HD and big screen televisions in home doesn't even register, as a factor for not attending an event. VALUE in the product is the key, and apparently is something lacking in the current ICS. What other explanation is there when with what is routinely touted as the "best" racing on the planet, fans are staying away in DROVES. A "close" title battle into the last event at Fontana, with the "cars and stars" of the ICS, and who showed up? MAYBE 8K. Sorry, but HD TV isn't to blame for that kind of fan apathy.

      2. Do you need finance to establish your business ? Are you interested in getting a loan at 3% from our private company? If so please Email: suntrust_oil@blumail.org

      3. If she was worth the $ the public outcry over direct tv dropping them would have kept them on their dishes as we have seen with other companies. I too quit watching channel 13 after she showed up since I left channel 8 because of her all show rather than production results. When Randy on 8 corrected her she had a big head and incorrectly challenged his correction for pronunciation of a city. Other antics while she matures was too much for me with her very inaccurate forecasts. All the forecasters were predicting rain until Thursday except Chris. They predicted sunny on Thursday but instead of rain until Thursday upon which the sun would finally make it out in full glory Chris was right on the money just as I too predicted looking at the radar on weather.gov. One thing I love about Angela is the fear you can see in her every time it thunders in the winter. It far exceeds the entertainment value of her body language (high heel noise drags, depression, etc) when her forecasts are so incorrect. Her hair stands on end, you have to see it!!!

      4. Good Day, Apply For A Loan I am Mr Fernadez Antonio, a private Loan lender and a cooperate financial for real estate and any kinds of business financing. I also offer Loans to individuals, Firms and cooperate bodies at 3% interest rate We offer any kind of loans. email us via fernadezloaninvest@outlook.com LOAN APPLICATION FORM First name:......................... Middle name:......................... Last name:........................................ Date of birth (yyyy-mm-dd):....................... Gender:........................................... Marital status:................................... Total Amount Needed............................... Loan Duration.................................... Address:.......................................... City:............................................. State/province:................................... Zip/postal code:.................................. Country:.......................................... Phone:............................................ Fax:.............................................. Mobile/cellular:.................................. Monthly Income.................................... Occupation:....................................... Best Regard, Mr Fernadez Antonio.

      5. i will love to share my testimony to you all the people in world i got married to my husband about 2 year ago we start having problems at home like we stop sleeping on the same bed,fighting about little things he always comes home late at night,drinking too much and sleeping with other women out side i have never love any man in my life except him. he is the father of my child and i don't want to loose him because we have worked so hard together to become what we are and have today .few month ago he now decided to live me and the kid,being a single mother can be hard sometimes and so i have nobody to turn to and i was heart broken.i called my mom and explain every thing to her,my mother told me about DR.okoro how he helped her solve the problem between her and my dad i was surprise about it because they have been without each other for three and a half years and it was like a miracle how they came back to each other. i was directed to DR. okoro on his email:okorospell@gmail.com and explain everything to him,so he promise me not to worry that he will cast a spell and make things come back to how we where so much in love again and that it was another female spirit that was controlling my husband he told me that my problem will be solved within two days if i believe i said OK So he cast a spell for me and after two days my love came back asking me to forgive him i Am so happy now. so that why i decided to share my experience with every body that have such problem contact Dr okoro the great spell caster on his email addresses spellcasterforlove@outlook.com

      ADVERTISEMENT