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The Key Obamacare Benefit Most People Ignore

By David Williamson and Dan Caplinger - Mar 2, 2014 at 10:15AM

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The Affordable Care Act isn't just about having insurance coverage. Find out what can really save you money.

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 ( ANTM -1.19% ), Aetna ( 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 ( THC -4.01% ), Universal Health Services ( UHS 0.02% ), 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.

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

Universal Health Services, Inc. Stock Quote
Universal Health Services, Inc.
$121.64 (0.02%) $0.02
Anthem, Inc. Stock Quote
Anthem, Inc.
$395.00 (-1.19%) $-4.74
Aetna Inc. Stock Quote
Aetna Inc.
Tenet Healthcare Corp. Stock Quote
Tenet Healthcare Corp.
$71.05 (-4.01%) $-2.97

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

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