Don't Believe This Obamacare Cost Projection

We all know that most forecasts are worth less than the paper they're printed on. That's probably the stance you should take with some new cost projections for Medicaid expansion under Obamacare.

Here's what you should know: The Supreme Court upheld Obamacare, but left it up to states to decide whether Medicaid should be expanded. One state, Arkansas, is unique in that it wants to use private insurance exchanges to expand Medicaid. The problem is that private insurance is much more costly than traditional Medicaid managed care programs. But conveniently, a new study from Arkansas (of all places) says that Medicaid costs will only around cost 15% more. In the following video, Fool bureau chief Brenton Flynn explains why he disagrees.

What does this mean for Wall Street? If this new Medicaid expansion strategy gains traction, investors in more mainstream insurers like WellPoint (NYSE: WLP  ) and UnitedHealth (NYSE: UNH  ) could benefit, while Medicaid managed care companies such as Centene (NYSE: CNC  ) and Molina Healthcare (NYSE: MOH  ) might lose out on some business. It's not obvious how this will shake out yet, but Flynn says investors should stay tuned.

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