Hollywood is coming to the Obamacare exchanges, but what if the Obamacare exchanges went to Hollywood?
The latest buzz is that the White House has enlisted the help of friends in Hollywood to promote use of the health insurance exchanges established by the Affordable Care Act, commonly known as Obamacare. With this mesh of Hollywood and health reform in mind, I began thinking about the exchanges in movie terms. Just as summer 2013 saw a mix of moneymaking blockbusters and major flops, the launch of the Obamacare exchanges next week holds the potential for great success or embarrassing failure. Will they be a huge hit or a thudding disappointment -- and who wins either way? Let's go to the movies.
Iron Man 3 lays claim to being one of the biggest winners in theaters this summer. The latest in the Disney series inspired by the comic book character has raked in more than $1.2 billion worldwide so far. Robert Downey Jr., Gwyneth Paltrow, and company scored with nonstop action and great special effects.
If the health insurance exchanges kick into gear on Oct. 1 with no glitches, many will view the feat as a blockbuster achievement. There have been significant doubts about the readiness of the underlying technology supporting the Obamacare exchanges, particularly those run by the federal government. An error-free first week could dispel that skepticism and generate positive public relations momentum that helps build confidence for Americans who might be on the fence about purchasing insurance through the exchanges.
Several companies would likely bask in the glow if this scenario plays out. CGI Group (NYSE:GIB), for example, is an information technology consulting firm that has been heavily involved with building the federal health insurance exchanges, as well as several state-run exchanges. A smooth launch for the Obamacare exchanges would be a feather in the cap that could help CGI land additional contracts down the road.
Another probable beneficiary could be eHealth (NASDAQ:EHTH). Shares soared in July after the federal government awarded a deal that allows the online health insurance broker to enroll individuals in subsidized plans approved under Obamacare. If the technology behind the exchange systems works well, eHealth could see plenty of new business in coming months.
Box office flop
Some would argue that the Obamacare exchanges have much more in common with The Lone Ranger than they do with Iron Man 3. The movie about the legendary Texas ranger flopped, costing Disney more than $160 million. Even before its release, reports swirled about missed schedules and production problems.
Similar issues have plagued the Obamacare exchanges. "Operational challenges" led important functionality of the small employer exchanges to be delayed until 2015. The Government Accountability Office reported that 44% of tasks scheduled to be completed by March were still undone as of May. A security review initially scheduled for 51 days was cut down to just 10 days because of missed deadlines. The multitude of problems led Michael Astrue, who served as commissioner of the Social Security Administration until earlier this year, to state in August that "a functional and legally compliant federal exchange almost certainly will not be ready on Oct. 1."
It's easy to identify stocks that would probably take a dive should serious issues occur during the start-up of the Obamacare exchanges. Clear winners from that potential outcome aren't so easy to find. UnitedHealth Group (NYSE:UNH) might not experience a huge uptick as a result of exchange problems, but shares could receive a bump.
UnitedHealth CEO Stephen Hemsley said earlier this year that the large insurer will largely stay on the sidelines with respect to Obamacare exchanges. Hemsley's concern wasn't about technical issues, though. He prefers a wait-and-see stance because of fears that the initial wave of enrollees will have high medical costs.
Sometimes movies that are expected to fail actually perform well at the box office. At other times, anticipated winners end up being total duds. Studios don't know for sure what will happen until their movies hit the silver screens and audiences show up -- or don't.
The Obamacare exchanges will probably follow a similar path. We won't know until the audiences respond. It won't be very much longer, though. The exchanges will be showing on your screens (of the computer rather than theater variety) beginning next week.
Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.