We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Health Insurers Hit 52-Week Highs: What's Behind the Rise?
Read MoreHide Full Article
On Mar 7, 2017, shares of Cigna Corp. (CI - Free Report) , Humana Inc. (HUM - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) touched a 52-week high of $154.24, $218.93 and $169.36, respectively.
The rally in the stock is believed to be have occurred from the repeal and replace plan unveiled by the Trump administration.
Insurers were initially jittery about a repeal and replacement of Obamacare, the reform to which they had adjusted and shared space with for the past six years. They believed that any further change would mean redoing their business strategies.
But the repeal and replace plan did not fare badly with insurers. Some of the provisions of the new plan include age-based refundable tax credit to help individuals buy insurance and expands Heath Savings Account. The plan also puts an end to the individual mandate that required every individual to have health insurance or face a penalty. It also relaxes the requirement by businesses to offer coverage to their workers. Though the individual mandate provision has been stripped off, it will levy a penalty on individuals who fail to maintain coverage continuously.
The provision includes restructuring the Medicaid program by giving the states a block aid for Medicaid instead of open-ended funding under Obama.
But some of the old provisions that had bipartisan support have been kept intact. These include maintaining coverage for people with pre-existing conditions and allowing children to stay on their parents' plans until the age of 26.
While retaining the pre-existing conditions clause might hinder health insurers’ business, their ability to charge a penalty on those who fail to maintain coverage is being seen as a positive. Also, the provision to sell plans across state lines and Trump’s tax credit proposal, which will presumably keep consumers in the market, are being appreciated.
Health insurers, UnitedHealth, Cigna, Aetna, Anthem, Humana who had a bitter experience with individual exchanges are hopeful that the new provisions will give them more flexibility to offer lower cost plans and greater flexibility with regards to age. The proposal of lowering the cost of insurance for the younger population and charging a high premium for the older adults will have a positive effect. This will help in drawing the younger and healthier population to the insurance net and in turn improve the risk pool for insurers.
The bill will also not put an end to Medicaid immediately, and that means Medicaid expansion will continue till 2020. So Medicaid-centric companies like Molina Healthcare, Inc. (MOH - Free Report) and Centene Corp. (CNC - Free Report) will not see huge damage to their business in the near term.
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Health Insurers Hit 52-Week Highs: What's Behind the Rise?
On Mar 7, 2017, shares of Cigna Corp. (CI - Free Report) , Humana Inc. (HUM - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) touched a 52-week high of $154.24, $218.93 and $169.36, respectively.
The rally in the stock is believed to be have occurred from the repeal and replace plan unveiled by the Trump administration.
Insurers were initially jittery about a repeal and replacement of Obamacare, the reform to which they had adjusted and shared space with for the past six years. They believed that any further change would mean redoing their business strategies.
But the repeal and replace plan did not fare badly with insurers. Some of the provisions of the new plan include age-based refundable tax credit to help individuals buy insurance and expands Heath Savings Account. The plan also puts an end to the individual mandate that required every individual to have health insurance or face a penalty. It also relaxes the requirement by businesses to offer coverage to their workers. Though the individual mandate provision has been stripped off, it will levy a penalty on individuals who fail to maintain coverage continuously.
The provision includes restructuring the Medicaid program by giving the states a block aid for Medicaid instead of open-ended funding under Obama.
But some of the old provisions that had bipartisan support have been kept intact. These include maintaining coverage for people with pre-existing conditions and allowing children to stay on their parents' plans until the age of 26.
While retaining the pre-existing conditions clause might hinder health insurers’ business, their ability to charge a penalty on those who fail to maintain coverage is being seen as a positive. Also, the provision to sell plans across state lines and Trump’s tax credit proposal, which will presumably keep consumers in the market, are being appreciated.
Health insurers, UnitedHealth, Cigna, Aetna, Anthem, Humana who had a bitter experience with individual exchanges are hopeful that the new provisions will give them more flexibility to offer lower cost plans and greater flexibility with regards to age. The proposal of lowering the cost of insurance for the younger population and charging a high premium for the older adults will have a positive effect. This will help in drawing the younger and healthier population to the insurance net and in turn improve the risk pool for insurers.
The bill will also not put an end to Medicaid immediately, and that means Medicaid expansion will continue till 2020. So Medicaid-centric companies like Molina Healthcare, Inc. (MOH - Free Report) and Centene Corp. (CNC - Free Report) will not see huge damage to their business in the near term.
Cigna, Humana and UnitedHealth carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>