Obamacare brings boost to WellPoint

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Investors ended 2014 with a completely different view of WellPoint Inc.

Not only did the Indianapolis-based health insurer change its name to Anthem Inc. on Dec. 3, but the company’s prospects also are much brighter after the launch of Obamacare.

WellPoint strongly opposed the Affordable Care Act when it was passed in 2010, but the law turned out to be a boon for the company and its peers.

WellPoint’s stock price rose 53 percent from Sept. 30, 2013—the day before the Obamacare insurance exchanges started up—until Dec. 19, 2014, when the price closed at $127.95.

Before the launch of Obamacare, investors feared—correctly—that WellPoint would see a lot of its small-employer customers end their group health plans and send their workers to Obamacare exchanges. As of Sept. 30, WellPoint had lost 300,000—16 percent—of its small-employer health plan members.

But WellPoint implemented what it called a “catcher’s mitt” strategy to pick up even more new customers in the Obamacare exchanges. On Sept. 30, WellPoint had an industry-leading 751,000 exchange customers.

Profit from the exchanges is about half as large as from WellPoint’s small-group clients.

WellPoint has experienced a net gain from Obamacare of 530,000 members, Barclays Capital estimated. That’s a small addition to WellPoint’s total health plan membership of 37.5 million. But it helped boost WellPoint’s revenue during the first nine months of the year 3 percent, to $54.9 billion.

Barclays analyst Joshua Raskin wrote in an Oct. 30 research report, “we believe that investors can breathe a little easier.”

Explore all of our 2014 Year in Review coverage.

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