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. The Affordable Care Act is not the reason for the slow recovery and lack of high paying jobs for low skill workers. This is a trend that has been going since the early 80's. The recovery is real in the sense that GDP has been growing steadily at a rate of roughly 2.5% since the recession ended in late 2009 (newsflash, the stimulus worked) and the unemployment has been steadily dropping. The reason issue we are facing deals with a skills gap (not enough workers with the right credentials / experience) and wage stagnation due to corporate America being focused solely on maximizing profits for shareholders and not caring about the American middle class. Why should they? Multi-billion dollar mutlinational companies keep offshoring their profits in order to avoid paying taxes (which makes our deficit worse) they convince Americans to fight amongst themselves. If you want to create jobs and reduce the deficit, raise the minimum wage and change corporate tax laws. Of course, if you want to continue to belive that tax cuts for wealthy create jobs (which they don't) and allow corporations and the wealthy to continue to make you cover more and more of the costs of maintaining infrastructure, funding the military and other government services, then keep voting Republican. Hopefully someday you wake up and realize what's been going on since Reagan took office.

      2. Helloooooo, my name is Kate. I am so joyous to share this wonderful testimony about what Dr. Osoijiakhena, a great spell caster, did for me and my family. I wedded a year and 6 months ago, we were very happy during this whole period, i really love my husband so so much. I started noticing changes when he started coming home late at night, he stop paying attention to me, i later found out that he was having an affair with another lady, i dont know what she did to get to him but she really got a hold on him. He started spending weekends with her, and threaten for divorce. I was so heart broken and devastated, i spent many night thinking on how to get my husband back. A friend took it upon herself to to introduce me to one Dr. Osoijiakhena, a great spell caster, who once helped her with a spell that reunited her family and helped her husband secure a very prolific job. Though i had my doubts and never believed, but i decided to give it a try because i was helpless. I contacted Dr. Osoijiakhena, the Spell caster, to help me reunite my family by bringing back my husband from that other woman and break whatever hold she had on him. He only just told me that it's a minor issue, once i provide and do everything he will ask me to do, then i will have my family back again. I did everything he required. And he did it!!!!! My husband returned back to me and pleaded for forgiveness, and i also secured a well paid job in a big company, just as the great spell caster, Dr. Osoijiakhena said. I am so so happy to share my testimony on this wall. I am using this medium to tell every one that has same or similar problem to try the great Dr. Osoijiakhena through his mail: drosoijiakhenaspell@gmail.com......he is so real!!!!! He can also help you with: (1) IF YOU WANT YOUR EX GIRL/BOYFRIEND TO RETURN BACK TO YOU (2) IF YOU WANT YOUR HUSBAND/WIFE BACK (3) IF YOU WANT TO BE PROMOTED IN YOUR OFFICE (4) IF YOU WANT YOUR MAN OR WOMAN TO LOVE YOU (5) IF YOU WANT A CHILD (BARREN) (6) IF YOU WANT TO BE RICH/WEALTHY (7) IF YOU WANT YOUR HUSBAND/WIFE TO BE YOURS FOREVER (8) IF YOU'VE BEEN SCAMMED AND WANT YOUR MONEY BACK (9) IF YOU ARE HAVING DELAY IN GETTING MARRIED (10) IF YOU HAVE A COURT CASE AND WANT TO WIN (11) IF YOU'RE A DRUG ADDICT AND YOU WANT TO REALLY STOP (12) IF YOU CANNOT IMPREGNATE A WOMAN (STERILE) (13) ALL TYPES OF DISEASES I advise you to contact the great Dr. Osoijiakhena, the spiritualist for solutions via his email: drosoijiakhenaspell@gmail.com

      3. Sergeant McNally is buried in Cathcart Cemetery on a hill known as McNally%u2019 Hill. The Cemetery is in a natural bushland setting and is very well maintained.The emergency department at Ararat Hospital is known as the John McNally Emergency Department. Cathcart is approx. 4.6 km from Ararat and is approx. 345 m above sea level.

      4. My spring chicken of a Mom is turning 75 years young. She is a big fan of Frankie and I think she would get a big kick out of the film. I wanted to take her to the Broadway play but am priced out. Thanks for your time and consideration. Oh yea, Wildwood! Joie

      5. I thought this company would go bankrupt in 2013/2014. I predicted that four years ago. I was wrong. It will take another couple of years, but they will get there.

      ADVERTISEMENT