Medicaid reform tied to the Affordable Care Act, more commonly known as Obamacare or the ACA, is adding millions of new members worth billions in new premiums for insurers. More than 6 million people have signed up for Medicaid coverage since the ACA kicked off last fall.

That's good news for both insurance giants UnitedHealth Group (NYSE:UNH) and Aetna (NYSE:AET) and smaller regional players Molina Healthcare (NYSE:MOH), and Centene (NYSE:CNC).

Bulging Medicaid rolls drive profit opportunities
Not every state contracts out Medicaid to private insurers like these four companies, but 36 states do, and those 36 represent $108 billion of the $435 billion spent nationally on Medicaid, according to the Medicaid and CHIP Payment and Access Commission.

That means billions more in payments will end up in the hands of private Medicaid insurers over the coming years as 10 million people sign up for coverage. Those additional payments are are expected to help send earnings higher at all four of these insurers through 2016.

UNH EPS Estimates for Current and Next 3 Fiscal Years Chart

UNH EPS Estimates for Current and Next 3 Fiscal Years data by YCharts

Leveraging its position as the nation's biggest provider of private Medicaid insurance, UnitedHealth is expected to generate the greatest earnings per share over the next few years.  

The company serves 4 million Medicaid members, including 80,000 who signed up in the fourth quarter. That membership growth helped bump sales in its community and state business up 11% to more than $18 billion last year.

Aetna will also benefit from Medicaid expansion thanks to its $6 billion acquisition of Coventry in 2012. That deal brought Aetna's Medicaid membership to 2 million people across 12 states and increased the percentage of Aetna's revenue from government plans to roughly 30% from 23% previously. Importantly, Coventry doubled the percentage of Aetna's revenue coming from Medicaid to 10%. That market share growth is one of the reasons behind Aetna's guidance for government contracts revenue to hit $19 billion this year, up from just $7 billion in 2010. As a result, Aetna projects that Medicaid expansion will be a key driver as it grows from $47 billion in 2013 operating revenue to $100 billion in 2020.

Over at regional insurer Molina, the company hired 4,000 new employees last year to handle the rush of new Medicaid customers. Six of the 11 states Molina serves chose to expand Medicaid under the ACA, which caused Molina's membership to jump 11% to 2.1 million members in December. Overall, Molina expects that Medicaid growth will add $2 billion in annual revenue by 2015, bringing its total annual sales to $12.5 billion.

Centene is similarly positioned to grow, given that it already handles 2.5 million Medicaid recipients across 18 states. During its December investor meeting, Centene reported that it expects sales to total between $13.5 billion and $14 billion this year, up from $10.6 billion to $10.8 billion in 2013. That jump is expected to lift earnings per share to a range of $3.50 to $3.80 this year, up nicely from a range of $2.81 to $2.87 in 2013.

Fool-worthy final thoughts
Out of these four, only UnitedHealth has reported fourth-quarter earnings. However, the company's solid results should bode well for the other three insurers. Coming out of 2013, United expects sales to reach $128 billion to $129 billion, up from $122.5 billion in 2013.  

Controlling costs will be one of the biggest challenges and opportunities for UnitedHealth, Aetna, Molina, and Centene. Aetna estimates the top 3%-5% of Medicaid members requiring intensive care management represent 50% of all Medicaid costs. That means that keeping those members healthier will be key to translating revenue growth into profit.

That's why I'll be spending time looking over the upcoming earnings releases to see not only how many new Medicaid members were added but also what kind of operating margin is being generated. If these insurers can add millions of new members at a stable margin, 2014 could prove a good year for profits.