Please ensure Javascript is enabled for purposes of website accessibility

How Much Will Obamacare Subsidies Save You?

By Dan Caplinger - Sep 28, 2013 at 6:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Big subsidies could help Humana, WellPoint, and UnitedHealth get more people to get insurance, and thereby save HCA, Tenet Healthcare, and other hospital operators money from uninsured losses.

One big question about the Affordable Care Act has been how much the government will pay in subsidies. A recent report from the Department of Health and Human Services looked into that question, giving some answers about how much people should expect the government to chip in toward their health-insurance premiums.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning and author of the special free report "Everything You Need to Know About Obamacare," talks with Motley Fool health-care bureau chief Max Macaluso about subsidies and how much of the cost of health insurance they'll cover. Dan reveals that 27-year-olds with incomes of $25,000 should expect subsidies to cover about 32% of the cost, cutting their monthly premium costs to $145. For a family of four earning $50,000, the subsidy was about double, cutting costs by 64%.

Dan notes that the biggest savings came in high-cost states such as Wyoming, Alaska, and Mississippi. Subsidies tended to be larger for families than for singles, especially in lower-cost states. The net effect of the subsidies was to balance out disparities across states, going a long way toward flattening out premium costs nationwide.

Max and Dan then turn to the companies that could benefit from subsidies. Insurance companies Humana (HUM -0.31%), UnitedHealth Group (UNH 0.30%), and WellPoint (ANTM 0.15%) are all poised to gain if subsidies encourage more people to enroll in Obamacare policies, with WellPoint arguably benefiting the most since it has been most aggressive in embracing Obamacare exchanges. At the same time, Tenet Healthcare (THC -0.54%), HCA Holdings (HCA -0.68%), and other hospital operators could also see big profit gains, as more people having coverage should mean fewer losses for hospitals and other medical providers to absorb as bad debt.

Neither Fool contributor Dan Caplinger nor Max Macaluso, Ph.D., has any position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group and WellPoint and owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
$536.65 (0.30%) $1.59
Humana Inc. Stock Quote
Humana Inc.
$482.54 (-0.31%) $-1.48
Anthem, Inc. Stock Quote
Anthem, Inc.
$475.86 (0.15%) $0.72
HCA Healthcare, Inc. Stock Quote
HCA Healthcare, Inc.
$211.36 (-0.68%) $-1.45
Tenet Healthcare Corp. Stock Quote
Tenet Healthcare Corp.
$64.03 (-0.54%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.