Is Obamacare Fueling More Buyouts?

Apparently, health care's 2014 buyout bonanza has not been limited to pharma, biotech, and medical device companies -- it's reached hospitals and insurers as well.

Ascension Health, the largest not-for-profit health system in the United States, is considering acquiring an insurance company, and according to an analyst with Leerink Partners (as first reported by Modern Healthcare), the two top targets could be Centene Corp  (NYSE: CNC  ) or WellCare Health Plans  (NYSE: WCG  ) .

What would make these companies attractive acquisition targets?

Obamacare. More specifically, the Medicaid expansion. Both stocks are plays on the expansion of government-funded health care, and each makes sense as a potential buyout target due to their exposure to these expanding markets. But there's still possibility for additional upside with both, because of the uneven expansion of Medicaid -- many states, including some with big concentrations of Centene and WellCare members, haven't expanded Medicaid.

In the video below, from Friday's Market Checkup, the Motley Fool's health care-focused investing show, health care analysts Michael Douglass and David Williamson discuss the rumored deal, why the stocks look like potentially attractive buyout targets, and the more general trends we're seeing in hospitals and insurers around Obamacare.

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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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