Is America Prepared for Obamacare's Debut?

The Jan. 1 episode of The Motley Fool's Market Check-Up features Fool health-care analyst David Williamson discussing the biggest stories affecting Big Pharma, biotech stocks, and the health-insurance industry today.

The stock market is closed on the first day of 2014, but the New Year's holiday hasn't stopped Obamacare from going live. The Affordable Care Act has been the law of the land for years, but the most tangible part for millions of Americans will be new insurance coverage. Enrollment on the healthcare.gov marketplace surged in December, and, if also including the Medicaid expansion, roughly 6 million newly insured Americans begin coverage today.

That leads investors to the big question: Is the health-care system ready to handle the Obamacare patient surge, and will any stocks be set to profit?
 
There will be problems, possibly from insurers having incomplete data on the swarm of new customers, but David is largely inclined to say yes, the system is ready. There is pent-up demand for health-care services, and those with insurance are more likely to use them. This could help hospital stocks, which have been struggling with lower utilization. LifePoint Hospitals in particular could benefit, as Obamacare should cover a particularly large portion of its uninsured mix, but HCA Holdings remains my favorite of the group, given its strong free cash flow generation and dominant market position.
 
Investors need to pay special attention to the enrollment mix data. The Obama administration says it is coming, but we have yet to see it. While the young 30-somethings are seen as key to making the law function, the driver of hospital growth will be the older customer with pre-existing conditions who makes frequent visits. What is good for the insurers is bad for the hospitals, and vice versa. 
 
For more information, check out the following video.

What you need to know about Obamacare
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  • Report this Comment On January 01, 2014, at 9:57 AM, Spanview wrote:

    "There is pent-up demand for health-care services, and those with insurance are more likely to use them"

    The problems with this assumption are

    1) Fewer doctors/therapists/nurses available to provide the care as wages and jobs plummet from less money available to hire and profit. ( From Obamacare regulations). Thus,less care.

    2) Millions more ( debatable number...6 million? 8 million?) have lost their insurance from the mandates...and simply can't afford to buy the higher cost in premiums and deductibles "better" ( cough, cough) insurance mandated by law now. Fewer people thus using medical care.

    In all ways possible, this law ( which is not really a law, given how many magic wand waves have changed implementation rules and dates over the last 2 years), is horrible for our health care, our employment, our economy, our innovation.

  • Report this Comment On January 01, 2014, at 10:02 AM, djm20 wrote:

    The Fool continues their drumbeat support for the Obama Administration. Using statistics from the White House full press public relations efforts to 'sell the success' of the ACA, the Fool and its writers simply invent other angles to find the positive elements of the law.

    Must be tremendous threats from the Justice Department and the IRS to generate such support for the Administration. Given the history of this White House, the "do as we say or else" positions must be very intimidating.

    While I feel sorry for the Fool as it loses its market integrity, it is of their own doing. I'll certainly not see them anywhere near as credible as I did before. The steady stream of supportive ACA articles is just so revealing.

  • Report this Comment On January 02, 2014, at 10:57 AM, vet212 wrote:

    I don't think anything can prepare this nation for the destruction and havoc this ill conceived and I believe intentionally destructive law will wreak on America's already outstanding health care system

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