How Could This Controversial Extension Affect Obamacare, You, and Your Portfolio?

It is officially crunch time for Obamacare, with the six-month enrollment period for 2014 coming to a close in just 23 more days.

The results thus far for this transformational new health reform law have been mixed. On one hand, expanded Medicaid coverage in approximately half of all U.S. states, coupled with the enrollment of some 4 million people into Obamacare via the state and federally run health exchanges, have helped lower the number of people without health insurance and given hope that long-term health costs will remain under control.

On the other hand, total Obamacare enrollment is currently tracking below the Department of Health and Human Services' goal of 7 million. If this number isn't hit or if not enough healthy individuals enroll, insurance companies may not bring in enough in premiums to cover the higher expenses related to treating ill and elderly patients.

Source: White House on Flickr.

A double-edged sword
Earlier this week, however, the administration announced that it would be extending transitional health insurance plans that would have otherwise been cancelled under Obamacare for not meeting its beefed-up benefit requirements for two additional years, until Oct. 1, 2016.

The move is being made for one primary reason: to allow those whose health insurance plans were cancelled additional time to transition to a newer health plan. The ultimate goal of Obamacare is to ensure that as many people as possible have health insurance, and if it means extending the deadline by which these non-qualifying plans are allowed to be renewed, then regulators see it as a smart move.

However, this move can also be viewed as a double-edged sword for Obamacare.

Since July, we have witnessed a number of key deadlines delayed, including the implementation of the employer mandate. This is the component of the Affordable Care Act designed to ensure that employers of 50 or more full-time employees provide health insurance options, and possibly subsidies, for them. It was delayed first in July, and again more recently, until Jan. 1, 2016. When coupled with this week's transitional plan extension, these delays may weaken the urgency of Obamacare's deadline. However, the enrollment deadline at the end of this month have the potential to hurt enrollment as we enter those critical last three weeks of enrollment for 2014.

How this extension will affect you?
There's a pretty good chance this extension won't affect consumers, but estimates from Forbes indicate that millions of policies were cancelled because they didn't meet the beefed-up requirement of the Affordable Care Act.

Of these consumers, there's a good sized chunk that simply will not have the opportunity to extend their plans. Individual states, not the Obama administration, make the decision of whether to allow insurers to reinstate canceled plans. California is one state, for example, which chose not to allow its insurers to carry over cancelled plans. While there's not a perfect rhyme or reason to which states agreed to let insurers offer this extension, most Republican-led states, according to The Wall Street Journal, approved it. 

But, consumers in the states which have chosen to extend (about half of all U.S. states allowed this extension) can choose to continue renewing plans through Oct. 1, 2016 without having it cancelled and without violating the individual mandate. According to the Obama administration, citing RAND estimates, 500,000 people chose to keep their pre-Obamacare policies into 2014.

What this means for investors
The most obvious beneficiary of this extension would be insurers who have the opportunity to continue offering insurance coverage to those who could otherwise be priced out of the market.

In terms of large states that allowed their insurance companies to extend older health plans, Texas, Ohio, and Florida stand out as among the most populated. Some potential beneficiaries here would be Molina Healthcare (NYSE: MOH  ) and Centene (NYSE: CNC  ) which tend to focus on lower-income individuals and families and both operate in all three of these highly populated states. While this extension probably won't provide Molina or Centene with a large bottom-line impact, it could help improve their retention rate, especially when these individuals do transition over to Obamacare or an alternate form of insurance before Oct. 1, 2016.

Don't forget that hospital operators in these states should also be prime beneficiaries. Here I'm thinking about Community Health Systems and Select Medical, which operate acute care hospitals in the three aforementioned states. Hospital operators in these states would benefit since a larger number of people coming through its doors should have health insurance, meaning these hospitals would potentially be writing off less revenue as uncollected. As more people gain and retain health insurance hospitals should be able to utilize this extra revenue to update their equipment, or perhaps even pay out dividends to investors as Select Medical recently began doing.

With Obamacare's coverage cutoff date just around the corner, it isn't too late to learn about the most important aspects of how this law will affect you
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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 08, 2014, at 12:59 PM, quacker wrote:

    those transitional plans were already canceled.cover Oregon still doesn't work cover Oregon enrolled 4000 illegal aliens, their are more illegal aliens signed up for cover Oregon than citizens, look it up. how is that for helping Americans

  • Report this Comment On March 08, 2014, at 1:08 PM, BobPenn wrote:

    The delay is unconstitutional. It provesTed Cruz was correct; Obamacare is a disaster that should have been repealed and replaced or at least delayed. Obama shutdown the government to maintain Obamacare then unilaterally and unconstitutionally changed the law anyway with exemptions, delays, and new orders.

  • Report this Comment On March 08, 2014, at 4:18 PM, JADEKRAPE wrote:

    Aside from the fact that Obama does not have a legal authority to make this kind of change to the AFA that his Dem buddies in Congress passed for him....for those folks who already received cancellations it is too late to go back for most of them and reinstate the policy they lost

  • Report this Comment On March 08, 2014, at 5:25 PM, PaulSell wrote:

    Barry was asked for a comment about this latest extension & the phu*ked up numbers around the deadline and he just burst into the song, ♪♫Don't Worry, Be Happy... ♪♫ Recently when asked specifically about all the "cooking of the books" on OB☭M☭C☭RE ● & enrollment numbers & the CBO job loss report, Kathleen Sebelius, (AKA Mrs. Bagdad Bob), smiled and said, "Pull my finger." When the exact question was also posed to Barry, he tucked in his chin and gave a big toothy smile and said, "I just love that Yahoo picture of me with the Great Seal behind my pointy head, that looks like a halo on me. In addition I just want you all to know, I have a Bic Pen and an Obamaphone."

    Republicans are now just waiting for Barry & Company to work the kinks out of his legacy legislation OB☭M☭C☭RE●! After all this isn't just more of your Dear Leader's shuck and jive stuff, this is about millions of people's lives. The Republicans have promised to get right on Global Warming, as soon as OB☭M☭C☭RE● smoothes out with the millions of lives it has disrupted. Barry was quoted as saying, "When I go out and say the, "You like it you can keep it's... for years and still just as recently as the SOTU, constantly fudge my numbers and get 4 Pinocchios from the Washington Post the next day for it, I JUST CAN NOT UNDERSTAND WHY "YOU PEOPLE" STILL DON'T BELIEVE MY SHUCK & JIVE SH!T ANYMORE? I know you're all struggling and I want you to just reflect back to Christmas. It only cost you tax paying suckas' $800,000 to bring my main squeeze "Snuff Lip" back from her extended stay in Hawaii. She is now sporting a white girl Beyonce hair do. She somehow hopes I will get her confused with my frequent sleep over buddy. (Good luck with that dream Snuff Lip) Now, for you millennials: "Welcome to YOUR OB☭M☭C☭RE●! The Liberals, that now have to survive re-election with this albatross hanging around their socialist necks, STILL have to convince you soft headed millennials into another suicide vote for them again. Maybe we, Barry & Company, can just chat up Global Warming, Pot Legalization, minimum wage increase, and Income Inequality, while carefully avoiding your slim to none chances at even getting a job. We Dems are still just going to encourage you boneheads into believing that the lying Dems are actually going to make your lives so much better."

    RE:OB☭M☭C☭RE ● Barry has clearly stated exactly what he wants his legacy to be, that he is remembered for just 2 things: OB☭M☭C☭RE ● & being Vladimir Putin's B1TCH!

  • Report this Comment On March 08, 2014, at 8:49 PM, robbie2618 wrote:

    The author says that since more people will have insurance the hospitals will have less non paying patients so they will have less write offs. But it seems from what I’ve red in other articles it may actually have the reverse effect. More non paying patients, first most of the people signing up upwards of 80% had previous insurance, there taking advantage of the subsidies or where forced off there previous plans. Since they where already insured and paid there bills they don’t really count, but the newly insured that where previously uninsured most where uninsured because they lacked the funds to buy insurance. They are mostly lower income bracket. Remember this newly insured group are still mostly low income, they will not be able to pay the copay or out of pocket limits. So they will do what they have done in the past, they will go to the emergency room for there primary care and when the bill comes they will throw it away as they had before they had insurance. The hospital will still have to write off there visit, but as one study showed they will go to the emergency room more than before because they have the insurance card but not really understanding how it works so visits will actually increase. Hence more write offs than before. I don’t think the plan will work out as people had hoped. Excuse my spelling, never was a good speller I know some people are anal about it.

  • Report this Comment On March 09, 2014, at 8:43 AM, snakecatcher63 wrote:

    the whole obamacare act is unconstatutional completley. most of us are poor and cant buy insurance.you figure out your bills every month at cost to live,bank note on your home or rent,then your lite bill and your car payment then your car insurance, allready you cant buy gas for your car or food to feed your family and he is wanting to make you buy insurance under his dictatorship law just like HITLER AND PUTEN.now where do we stand.its called 1 world control.its all wrong and obama needs to be impeached now. the us is doomed under his rien of muslim acts.if he can break us he can controll us,thats what the plan is. i refuse to sighn up on his plan and every one i no and thats a lot of people, say the same. he and his party ane calling him the anti christ...........HITLERS POWER IN THE US.

  • Report this Comment On March 09, 2014, at 10:48 AM, stevem64 wrote:

    Comic relief time:

    http://youtu.be/mbHLhPK3LDg

    As a doctor, I made the above one minute YouTube animation to describe a common Obamacare office encounter.

  • Report this Comment On March 09, 2014, at 11:47 AM, sogole wrote:

    The ACA is simply not affordable.

  • Report this Comment On March 09, 2014, at 5:06 PM, TerryFlowers wrote:

    HR 676 = Healthcare Equality

    The Affordable Care Ace (ACA) or Obamacare is not the solution to our nation's healthcare challenges. Neither the Republicans nor the Democrats seem to have any real answers. Healthcare costs have been spiraling out of control for over three decades and something has to be done before it gets to the point that very few of us will be able to afford medical care. ACA may have slowed the rise in healthcare costs but it continues to rise faster than the rest of the economy.

    The only real solution for our nation is to remove the profit from the bottom line. All too often it is the patient that suffers as profit becomes the priority.

    HR 676 is a single-payer, true universal healthcare plan. It would leave the medical providers as the owners and operators of their practices in the private sector as not-for-profit entities. It would eliminate the need for the for-profit healthcare insurance industry. The program would be paid for by increasing the Medicare tax to 4.5% (would be less than what most of us pay in insurance premiums now). Businesses would see their taxes rise as well (again would be less than what they pay out in employee healthcare benefits currently).

    HR 676 would provide comprehensive medical care at no cost to the patient and would include medical, dental and vision. No co-pays, no deductibles, no out-of-pocket medical expenses. This would eliminate the bankruptcies and foreclosures that are the result of medical bills.

    HR 676, sometimes referred to as Improved and Expanded Medicare for All, would usher in true healthcare freedom, equality and justice. Research it for yourself. There are a number of excellent web sites that have a wealth of information. www.pnhp.org and www.healthcare-now.org and www.mforall.org are some of my favorites.

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