On Jun 19, President Donald Trump and his team made the final move toward affordable health plans for small businesses across the United States. The development originates from the executive order that Trump had signed in October 2017. The motive of such an order was to provide alternatives to the Affordable Care Act (ACA), also known as Obamacare.
The move is touted to assist small businesses that are vulnerable to the rise in healthcare costs. Further, approximately 11 million citizens of America, working for such firms would benefit from this development. This would also lead to higher demand for health insurance plans. Under such circumstances, investors should consider betting on health insurance stocks.
Terms of the New Order
The U.S. Department of Labor presented the Republican answer to Obamacare earlier this week. The Association Health Plans (AHP) aims to provide the same healthcare benefits to employees of smaller companies that are enjoyed by workers of bigger businesses. Such a provision provides small firms the power to negotiate costs and flexibility of healthcare coverage. The plan will come into effect on September 1.
Under the new plan, companies as well as individuals located in the same region or involved in similar businesses are allowed to form associations. Moreover, just like large employer group plans, AHPs would not be required to necessarily cover 10 types of essential benefits, including hospitalization, drugs and maternity care. Such requirements were compulsory under Obamacare.
However, other ACA rules, such as the out-of-pocket maximum (OOP) that an individual has to pay in a year, bans on lifetime maximums and annual limits, would be applicable to AHPs. Moreover, preventive care services would be treated the way they were under ACA, wherein the beneficiary would not have to pay the OOP. Finally, the provision also ensures that coverage would not depend on how healthy or sick a beneficiary is.
Small Retailers and Restaurants to Purchase More Health Plans
As a result, local restaurants and retailers from a specific area would form groups to participate in Small Business Health Plan. This not only provides cheap insurance but also boosts overall sales of health plans.
From 2006 through 2016, there was a dip in health plan sales to a paltry 56% of all small business employees due to rising healthcare costs. Provisions under the AHP tackles this by allowing health policies to be available at extremely affordable prices. Most importantly, it allows such businesses to choose and create their own health plans to suit their needs.
Experts believe that accessibility to affordable healthcare stems from the fact the people should have the ability and freedom to choose the coverage that suits their requirements. Increased federal spending and imposition of mandates only reduce the ability to insure one self.
4 Best Choices
Trump’s latest order to provide an alternative to the ACA would provide millions of Americans the freedom to choose their own health policies. Small business owners and retailers participating in group health plans would witness a reduction in administrative costs arising out of economies of scale. Such developments would not only improve the ability to insure oneself but also boost the overall sales of insurance policies.
In this context, we have selected four stocks that are expected to gain from these factors. These four stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
WellCare Health Plans, Inc. (WCG - Free Report) is the provider of managed care services for government-sponsored health care programs.
The company is based out of Tampa, FL and sports a Zacks Rank #1. The expected earnings growth rate for the current year is 20.53%. The Zacks Consensus Estimate for the current year has improved 4.6% over the last 60 days.
Cigna Corporation (CI - Free Report) is a provider of insurance and related products and services in the United States as well as across the globe. The company also provides to employers, unions and other groups and individual healthcare policies.
The Zacks Rank #2 company is based out of Bloomfield, CT. The expected earnings growth rate for the current year is 26.58%. The Zacks Consensus Estimate for the current year has improved 2.7% over the last 60 days.
Humana Inc. (HUM - Free Report) is a provider of retail, group and specialty healthcare insurance services.
The company is based out of Louisville, KY and carries a Zacks Rank #2. The expected earnings growth rate for the current year is 19.45%. The Zacks Consensus Estimate for the current year has improved 0.8% over the last 60 days.
Anthem, Inc. (ANTM - Free Report) is the owner and operator of a health benefits company in the United States. It provides commercial, business as well as group health insurance plans.
The company is based out of Indianapolis, IN and has a Zacks Rank #2. The expected earnings growth rate for the current year is 27.78%. The Zacks Consensus Estimate for the current year has improved 1.9% over the last 60 days.
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