Many Americans are worried about the cost of health insurance under Obamacare, and as the Oct. 1 opening of health-care exchange open enrollment approaches, there's been a lot of uncertainty about the premiums that Americans would have to pay. A new report from the Department of Health and Human Services shed some light on costs under the Affordable Care Act, including what residents in each state can expect to pay.
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 the states in which Obamacare policies will be cheapest. Dan and Max discuss the findings, noting that the report looked at the least-comprehensive bronze-level plans and took weighted averages of the costs that residents of each state would bear. For more-comprehensive silver-level coverage, residents in these low-cost states can expect to pay 30% to 50% higher.
Max and Dan then discuss the impact these premiums have on investors. Dan notes that lower prices reflect more competition among insurance companies seeking to provide policies to customers. In low-premium states, heightened competition is in part responsible for lower prices, which in turn could reduce profits. Those competitive pressures could be one reason why Cigna (NYSE:CI), Aetna (NYSE:AET), and UnitedHealth Group (NYSE:UNH) have been reluctant to participate in most states' health-insurance exchanges. Yet as Dan points out, WellPoint (NYSE:ANTM) has been the exception there, being more aggressive in offering Obamacare plan coverage. In the end, investors need to look at actual medical costs as well as premiums to get a full picture of how profitable each state's business will be.
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.