2 Big Obamacare Winners
While there's been a lot of talk about the horrors of new health-care regulations, it's now time to stop the rhetoric and look at the opportunities for smart businesses and investors, notes Soula Stephanopoulos of Personal Finance.
Welcome to the brave new world of US health care, courtesy of the Patient Protection and Affordable Care Act (PPACA), commonly called “Obamacare.”
One of the major changes under Obamacare is that millions of lower-income Americans will qualify for Medicaid, the federal-state partnership that currently pays medical bills for the nation’s most needy families.
It’s estimated that up to 16 million Americans will be newly insured through Medicaid by 2016, with coverage fully paid by the federal government (states now pay roughly half). While Medicaid expansion will not officially start until January 2014, about 18 states expanded their Medicaid managed-care programs in 2012, and 20 more are expected to do so in 2013.
These millions of potential new customers represent a huge opportunity for Medicaid health maintenance organizations (HMOs). The two largest in this sector are now WellPoint (WLP) and UnitedHealth Group (UNH), each with an estimated 8% market share. Another three firms each have 3% to 4% of the market: Centene (CNC); Molina (MOH); and Wellcare (WCG).
As a group, these five account for just one-quarter of the US Medicaid managed-care market.