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Obamacare Set to Gain From Mid-Term Polls: 4 HMO Picks

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Could mid-term win for Democrats end up expanding Obamacare? This may sound unrealistic right now, given that the Trump administration has tried to repeatedly repeal or undermine the Affordable Care Act (ACA). But polls indicate that the Democratic push to boost health insurance has struck a chord with a large part of the voting populace.

So much so that it could help Democrats reap rich dividends come polling day. In fact, both large and small states could witness Obamacare expansion post elections irrespective of which party wins at the hustings.

The public mood has also swung increasingly in favor of Obamacare, per recent poll results. Health Maintenance Organizations or HMOs, which have made massive strides in the post-Obamacare period, are likely to gain significantly from wider Obamacare coverage. Adding these stocks to your portfolio looks prudent at this time.

Nine States Could Witness Medicaid Expansion

Nine of the 18 states that have resisted Medicaid expansion up to now could change their stance post November polls. Incidentally, Medicaid is a crucial element of the ACA. This could lead to more than a million low-income individuals gaining Medicaid coverage.

Some observers have gone to the extent of labelling Election as the “biggest referendum on the ACA.” Florida and Georgia, two of the largest states to resist Medicaid expansion despite large ACA subsidies, could feel the heaviest impact.

Both contests feature Democrats backing expansion who are widely tipped to succeed Republican governors. Smaller states also reveal a similar dynamic, while elsewhere GOP governors have promised not to block public opinion.  

More Americans Now Favor Obamacare

If all holdout states do go on to expand Medicaid, 3.7 million additional Americans will gain Medicaid coverage. Per the Kaiser Family Foundation, the rollout of such measures across 32 states and the District of Columbia has provided these benefits to 10 million individuals to date.

And this is an increasingly plausible outcome, given the shift in the public mood. A recent Kaiser poll shows that 50% to 40% of Americans now favor the ACA. Approval for the law had consistently remained below 50% over the last six years of Obama’s term as president.

Not surprisingly, Democrats have positioned the issue at the focal point of their campaigns. Per a NBC/Wall Street Journal Survey, healthcare was ranked second after jobs and the economy as an issue to be considered, while voting for Congress. Those mentioning healthcare as an issue favor Democrats to Republicans by 69% to 22%.  

Our Choices

Medicaid expansion has emerged as a surprisingly emotive issue ahead of mid-term polls. With Democrats placing better health insurance at the center of their campaigns, Obamacare is widely slated to receive a boost. Even some Republican governors have pledged not to stand in the way of public opinion.

HMOs, which have substantially expanded their market share in the post-Obamacare era, are expected to gain from this trend. Adding these stocks to your portfolio seems to be a smart option. However, picking winning stocks may be difficult.

This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score. 

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM Score.

Molina Healthcare, Inc. (MOH - Free Report) is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs such as the Medicaid program and the State Children's Health Insurance Program (SCHIP), catering to low-income persons.

Molina Healthcare has a VGM Score of A. The company’s expected earnings growth for the current year is more than 100%.  The Zacks Consensus Estimate for the current year has improved by 0.2% over the last 30 days. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

WellCare Health Plans, Inc. offers government-sponsored managed care services.

WellCare Health Plans has a Zacks Rank #2 (Buy) and VGM Score of A. The company has expected earnings growth of 27.1% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 30 days.

Humana Inc. (HUM - Free Report) is one of the largest health care plan providers in the United States.

Humana carries a Zacks Rank #2 and has a VGM Score of A. The company has expected earnings growth of 21.1% for the current year.

UnitedHealth Group Incorporated (UNH - Free Report) is a diversified health and well-being company.

UnitedHealth carries a Zacks Rank #2 and has a VGM Score of B. The company has expected earnings growth of 27.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.7% over the last 30 days.

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Humana Inc. (HUM) - free report >>

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