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Obamacare Expands: What You Need to Know

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On Tuesday, the CBO issued a report on Obamacare and its reduced (but still substantial, at $1.4 trillion) cost. The report also included some very interesting numbers investors interested in the Obamacare health care mega-trends should watch carefully.

The report predicts that Medicaid will enroll an additional 7 million members by 2014 due to the Obamacare Medicaid expansion. That's good news for Medicaid insurers, but that good news continues -- the CBO expects Medicaid enrollment to almost double again by 2018. The insurance exchanges are expected to enroll a net of 6 million new people in 2014 (numbers that are not directly comparable to current enrollment in the exchanges). But by 2015, that number is expected to double to 13 million. And in 2016, the CBO expects another double (or close enough) -- to 24 million.

But what about sicker people skewing the risk pools? The CBO expects the risk adjustment, reinsurance, and risk corridors -- which were created to assure that insurers neither made nor lost too much money on the exchanges -- to be budget-neutral. What this means is that the CBO expects that the government will pay out as much money to insurers for worse risk pools as it takes in for insurers making too much money on the exchanges. Put another way, the CBO does not appear to expect that insurers will make or lose too much money from the exchanges.

In this video from Tuesday's Market Checkup, Motley Fool health care analysts David Williamson and Michael Douglass discuss the investing takeaways from the CBO report and the stocks most likely to benefit from this health care mega-trend.

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Michael Douglass

As the Motley Fool's Health Care Editor/Analyst, I focus on all things health care -- although my greatest interest is in the megatrends reshaping the American health care system, including the Affordable Care Act, Accountable Care Organizations, a shifting regulatory landscape, and the new drug discoveries fundamentally changing disease management and treatment.

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