The Affordable Care Act Is Helping Health Stocks, Like It or Not
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Obamacare is credited with significant improvement in profits for hospitals and insurance companies. However, some hospitals attribute the increase in profits to an improving economy because people have more access to healthcare, so they are more willing to pay for medical procedures.
Hospital Corporation of America (HCA), the country’s largest hospital chain, estimates that Obamacare is responsible for 1/3rd of its third-quarter profit growth. According to HCA’s CEO, Milton Johnson, the law is boosting hospital profits because it 1.) delivers more patients to the company’s 280 hospitals and 2.) fewer patients lack insurance. According to HCA, 44% of its patients who purchased coverage through Obamacare, previously never had insurance.
Obamacare’s impact is manifested in hospital chains’ wider profit margins (meaning that their services are provided at a higher cost than their actual value). This is due to the fact that Obamacare is designed to control costs and provide insurance to more people; therefore, hospitals and other health-care providers are merging.
Health insurers have also reaped some rewards from Obamacare because it’s driving new member growth. Moreover, customers, who bought insurance through healthcare.gov and online exchanges by states, are more likely to pay their bills and keep their policies, than those who buy individual insurance. According to Aetna CEO, Mark Bertolini, the private insurance market “has a lot of turnover, and every year almost a third of it turns over.”
Summary by MedicalGroups.com
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