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Obamacare Winners: Which Companies Will Profit the Most?

By David Williamson and Dan Caplinger - Mar 1, 2014 at 10:10AM

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Health-insurance companies and hospitals were both seen as big winners from the Affordable Care Act. Find out why reality's a bit more complicated.

The Patient Protection and Affordable Care Act, better known as Obamacare, is hurtling toward full implementation. As it has taken effect, Obamacare has had huge impacts on entire industries, including health insurance companies and health-care providers. In anticipation of Obamacare's positive impact, shares of insurers UnitedHealth ( UNH 0.89% ) and WellPoint ( ANTM 1.15% ) soared last year, and hospital companies Community Health Systems ( CYH 3.58% ) and HCA Holdings ( HCA 0.80% ) also enjoyed sharp gains. Yet some are now questioning whether Obamacare will really help all of these industries as much as they expected.

In the following video, Fool health-care analyst David Williamson and Fool director of investment planning Dan Caplinger discuss the potential winners of Obamacare. Dan notes that many people initially believed that a decrease in the number of uninsured patients would help HCA, Community Health, and other health-care providers by helping them reduce uncollectible debts from serving those without the means to pay for care. Yet he observes that as many people have chosen lower-tier insurance plans, they still have to pay big deductibles and out-of-pocket maximums, and that could leave hospital companies still having to write off substantial amounts for lower-income patients. David adds that with UnitedHealth, WellPoint, and other insurers largely competing with each other on price, especially for lower-tier policies, many customers don't realize the full costs they might end up realizing. Although a rise in people using health care is a positive for hospitals, David observes, it only benefits them if customers -- or their insurance companies -- will end up paying the bill.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
$468.86 (0.89%) $4.13
Community Health Systems, Inc. Stock Quote
Community Health Systems, Inc.
$12.44 (3.58%) $0.43
Anthem, Inc. Stock Quote
Anthem, Inc.
$415.97 (1.15%) $4.73
HCA Healthcare, Inc. Stock Quote
HCA Healthcare, Inc.
$240.51 (0.80%) $1.91

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

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