The Patient Protection and Affordable Care Act, better known as Obamacare, is leading to millions of people getting insurance coverage who previously didn't have it. Many have pointed to the profit potential that insurance companies WellPoint (NYSE:ANTM), Aetna (NYSE:AET), and other major carriers are reaping from Obamacare. But for the general public, getting coverage means more than just making smaller copays for service. It also puts insurance companies on your side in negotiating deals with Tenet Healthcare (NYSE:THC), Universal Health Services (NYSE:UHS), and other health-care providers who routinely charge much higher amounts to patients covering their own medical bills than they receive from insurance companies like WellPoint and Aetna.
In the following video, Fool health-care analyst David Williamson and Fool director of investment planning Dan Caplinger further analyze this key advantage that Obamacare is making available to those who otherwise wouldn't have health insurance. Dan notes that in many cases, the huge savings from these managed care arrangements far exceeds the value of the health services people receive under their policies. As insurance companies become more powerful, it means hospital companies become more at risk of adverse negotiated deals. David points out that the same services can have vastly different costs even within the same city, let alone in different areas, making it even more important to have insurers of national scope fighting for you. The cost savings help insurance companies as much as they help you, and the alignment of interests there is a key part of what drives Obamacare's potential success.
Dan Caplinger and David Williamson have no position in any stocks mentioned. The Motley Fool recommends 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.