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<p>Why would you compare starting from 2008 when the ACA law was passed in 2009 if you want to see if passing the law affected health insurance stocks? I am sure it’s more complicated than looking at two stocks but they are certainly not negatively affected.</p>
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<p>The ACA was adopted in March, 2010, not 2009. By that time the stock market was already starting to recover from the lows reached in 2009, when the S&P 500 was worth about half what it had been before the 2008-09 crash. Health insurance stocks probably lagged that early stage of the recovery because of uncertainty about what Congress would do to the nation’s health care system. Had they opted for single-payer, it would have spelled the end of private health insurance as we know it; surely that must have depressed health insurance share prices. Since 2009-2010, the entire market has surged strongly upward, apart from a few temporary corrections. Consequently, I can only conclude that comparing the price of a few health insurers’ stocks in 2009 (well before the ACA was adopted, and while stock prices in general were still depressed, and health insurance stocks even more so because of the uncertainty hanging over the industry) to the present, and attributing all or most of that change to favorable treatment of health insurers under the ACA, is either disingenuous or incompetent analysis. A large fraction of their share price increase since 2009 just reflects broader market trends. Another large fraction probably reflects a rebound based on investors’ relief that the health insurance industry was not going to just disappear. There may be some residual fraction reflecting expectations that health insurers will actually be more profitable under the ACA than they were under the status quo ante, but you’re a long, long way from demonstrating how much of the increase is due to that factor.</p>
<p>In light of all that, comparing present share prices to 2008 share prices–before the crash, and before investors were seriously contemplating radical health care reform–is probably a more informative and more honest comparison.</p>
<p>Going back to June 2007, comparing Vanguard Health Care Index fund to S&P, Health Care Index Fund 52%, S&P 12%. At the least favorable point for comparison, Aug 2008, when Health Care Fund had a jump while S&P was declining before crash, Health Care Index fund 60%, S&P 30%.</p>
<p>I am not saying this is conclusive by any measure. Just that if you are looking to see if we got a fair deal, this could be one way. If you suspect the health insurance industry got a good deal, their stock price doesn’t prove you wrong keeping you to speculate.</p>
<p>I should have compared Vanguard Health Systems not Health Care Fund. Vanguard Health systems etf is new since 2011. During that time, S&P comes out better, 33% vs 17% if it means anything. </p>
<p>For United Health systems, from Jun 2007 to present 44%, S&P 13%. Or comparing Aug 2008 to present, 160% vs 35% for S&P.</p>
<p>My dog got sick at 4 in the morning. I am up cleaning after him and waiting for the next accident. I found a better fund to compare iShares Dow Jones Health Providers etf that include United Health Group Aetna, Well Point, Cigna, … Since June of 2007 48% increase S&P 13%. From Aug 2008, 88% S&P 33%.</p>
<p>Igloo, I’m not sure what you are getting at. I don’t think that stock valuation has much to do with profits or profitability. That’s a factor that goes into stock price, but companies with weak fundamentals often outperform those with strong fundamentals for a variety of reasons. I’m not sure what led to this discussion, but I think the underlying concern are increased costs for health care as compared to other measures, such as CPI. The problem in the health care market wasn’t that the insurance companies are rapacious and using premium dollars to drive profits – they were always a regulated industry. The issue is that the overall costs of medical care have continued to rise steeply, with insurance premiums tracking that rise.</p>
<p>That’s as much of an oversimplification as saying the reason college costs have gone up 500% in the last three decades is because the cost of education has gone up.</p>
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<p>So UNH is up 6% a year- Confiscatory! </p>
<p>It had traded in the 50’s for years. When ACA was passed in 2010 it was trading in the low 30’s, so taking a starting point in 2010 means that you are using a reference point that is 40% below the typical for the stock. </p>
<p>And UNH isnt doing exchanges, so its hardly like the Mandate is shoveling cash into the their stock price. </p>
<p><a href=“https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1294434000000&chddm=484058&chls=IntervalBasedLine&q=NYSE:UNH&ntsp=0&ei=VHheUpiqGZSgkwPwSA[/url]”>https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1294434000000&chddm=484058&chls=IntervalBasedLine&q=NYSE:UNH&ntsp=0&ei=VHheUpiqGZSgkwPwSA</a></p>
<p>A more interesting measure would be to look at the fundamentals, frankly. I don’t know how stock prices got on the radar of this thread, but that’s speculation, by definition. Looking at the fundamentals will tell you the story. </p>
<p>We do know insurance companies in New York were made to refund this year, due to the 85% rule. But, really, insurance companies are not suffering in this new system. They remain a profitable venture selling a now mandatory product. </p>
<p>It is what it is. But let’s not pretend we have a lot of money to throw at these companies through the new subsidy programs. It’s going to get costly and complicated. </p>
<p>Medicare for all would have been simpler a d more efficient. But it probably would have cost jobs, which we also can’t afford. Six of one half a dozen of the other. In the end, it’s our kids generation who will pay.</p>
<p>argbargy - I don’t know what you are trying to say. 6% increase a year compared to less than 2% a year for S&P. You can argue it is more complicated than that and it may not be meaningful to conclude either way from those numbers but you can’t deny the contrast is striking. If you say up 6% a year, no big deal, you also have to say on the average up less than 2% a year.</p>
<p>calmom - My point was our bickering between people who get subsidies and people whose premium is going up is misplaced.</p>
<p>I am saying 6% isnt much. Especially considering the rate of medical inflation and they have been doing a stock buy back program. </p>
<p>It traded in the 50’s and now trades in the 70’s. Thats not exactly printing money. </p>
<p>ehealthinsurance.com seems to be working a lot better healthcare.gov, so I dont see how eliminating the private sector is going to be a silver bullet on costs.</p>
<p>If only 2 million people sign up on the exchanges, that wont be good for health insurance companies. ;)</p>
<p>Did I start the thread in my sleep? I don’t remember starting a thread. </p>
<p>I think speculation is telling. We can find a carcass following vultures :)</p>
<p>argbargy - You fail to reference the general market, up 2%. 6% isn’t much just 3 times more than 2% 
You are only 3 times wealthier than I am, you poor man!</p>
<p>Is 2 million the expected number to sign up?</p>
<p>No…7 million are expected to sign up. </p>
<p>2 million is the hopeful number by the haters. :)</p>
<p>That 2 million number is not as good for business as the 7 million dollar number.</p>
<p>Check out tenet healthcare. The company was almost dead. Procedures were done that were not necessary. Symbol is thc. Now look at Thc. the company is embracing Obamacare as the company sees a business opportunity. Hospitals can benefit from ACA. ACA may be already reflected in their stock prices though.</p>
<p>Seeing as United has been on a stock buy back program, and they are in a sector with price inflation should you expect their stock price to go up faster than the index, yes?</p>
<p>UNH has 70 million subs. The Blue’s and Wellpoint are over 30M. Not sure what Aetna and Cigna have but its probably 10’s of Millions of subs. </p>
<p>Fighting it out for 2 million Obama subs with preexisting conditions is not a windfall. They are just a small percentage of the overall subscriber base and how profitable they are remains to be seen.</p>
<p>True, but if all they get are the unhealthy the whole thing collapses. Everyone is required by law to sign up. If everyone was mandated to eat hamburgers for lunch fast food stocks would soar.</p>
<p>Oops… Not 7 million dollar number… 7 million enrolled number. </p>
<p>My wife and I have started watching older episodes of Modern Family. I am not going to arrange my evening around the show but I think it is a funny, well written, well acted show.
I noticed that coveredca is runnning ads during the show. Has to be good for the people creating the ads, the tv stations, etc. The people that own the rights of Modern Family or those that get residuals benefit. Then there are those in the medical field that are going to benefit. Drug companies. Insurers. Even with the tax, medical device makers benefit. Drug store chains should make money. I havent checked walgreens stock price for awhile.</p>
<p>If the individual mandate succeeds, the insurance industry will get a lot more customers.</p>
<p>But not everything in life is zero-sum. Just because the insurance industry profits, doesn’t mean everyone else is worse off. Many government actions will benefit some industries and harm others. That is not the only way to measure government actions.</p>
<p>Just for one example, and we can think of many: In my area, it used to be that people put wood shingle roofs on their houses. But now, wood shingle roofs are illegal. So other roof-material manufacturers and installers are profiting. But does that mean the rest of us got a raw deal? Why no. It’s a public benefit that if someone’s house is on fire, it doesn’t spray flaming roof shingles to set neighboring houses on fire. The non-wood roofers benefit from this change, and so does everyone else.</p>
<p>Healthy people are going to sign up.</p>
<p>There are probable outcomes that are not losses or windfalls. </p>
<p>I like the “If everyone was mandated to eat hamburger” thought.</p>
<p>This is my variation of that. If a community invests 2 billion and outsiders invest 18 billion into the community, it is going to be good financially for the community. Good business.</p>
<p>There are businesses all over the world trying to get deals like the above. Maybe the deals are a little smaller. Businesses invest a small fraction…outsiders invest the vast majority of capital. That is almost how the whole business sector in SF works. :)</p>