{"id":31133,"date":"2012-07-26T07:27:29","date_gmt":"2012-07-26T11:27:29","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/07\/medicaidmedicare-show-path-to-profits-for-healthcare-providers\/"},"modified":"2012-07-26T07:27:29","modified_gmt":"2012-07-26T11:27:29","slug":"medicaidmedicare-show-path-to-profits-for-healthcare-providers","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/07\/26\/medicaidmedicare-show-path-to-profits-for-healthcare-providers\/","title":{"rendered":"Medicaid\/Medicare Show Path to Profits for Healthcare Providers"},"content":{"rendered":"

Article by Investment U<\/a><\/p>\n

Many experts, analysts and pundits are trying to take on the massive task of summarizing the entire Supreme Court\u2019s decision on the Affordable Care Act in about 500 words or less.<\/p>\n

This approach doesn\u2019t work. In our evolving 24\/7 news cycle, it\u2019s a necessity to churn something out even if it isn\u2019t fully vetted. Most knee-jerk reactions were a response to which side of the fence you practiced and preached your politics. Either Obamacare will bring healthcare to the downtrodden in this country or it\u2019s the beginning of the European socialist revolution.<\/p>\n

It\u2019s neither. It\u2019s just the law of the land at the moment. Our country\u2019s history is fraught with laws passed that were thought to be the spark of the Apocalypse. Laws have come and gone and we are still here. Now those who take the practical approach to a changing political backdrop are those who in the end profit from those changes. Healthcare reform is here. What we need to do is look at it as it all comes to light and a better understanding, and then act accordingly.<\/p>\n

A few days ago, I wrote a piece on the new investment tax<\/a> that\u2019s derived from this legislation. Depending on your income and investment structures, you may need to protect your assets. Now, I see another aspect of the law that will have a profound effect on the healthcare industry and may provide investment opportunities going forward.<\/p>\n

How the ACA Affects the Medicaid\/Medicare Businesses <\/strong><\/h2>\n

As we know, the individual mandate was ruled constitutional. However, the Court did limit Medicaid expansion by limiting the federal government\u2019s power to put an end to states\u2019 funding.<\/p>\n

The court also ruled that the federal government can\u2019t punish states that don\u2019t comply with the Affordable Care Act\u2019s purpose of expanding Medicaid coverage. So there will be no withholding of funds to those Red States who oppose the law down to the core of their Governor\u2019s souls (insert Rick Scott and Rick Perry). States have the ability to expand coverage, but they can\u2019t be forced to.<\/p>\n

Why does this matter? It shakes up the landscape of the industry, which the markets have shown since day one of the ruling. It\u2019s a negative for major health insurance companies, but a positive for Medicaid companies.<\/p>\n

Private Sector Growth in Healthcare Will Get Worse<\/strong><\/h2>\n

Here\u2019s the situation with the major managed care health providers \u2013 such as UnitedHealth <\/strong>(NYSE: UNH), WellPoint <\/strong>(NYSE: WLP), Aetna <\/strong>(NYSE: AET), Cigna <\/strong>(NYSE: CI) <\/strong>and Humana <\/strong>(NYSE: HUM). When you look at their quarterly earnings reports, you see all the growth is coming from public programs like Medicare and Medicaid. The private sector business is lagging and not seen as very profitable any more.<\/p>\n

Many people thought healthcare reform would be a boom to the entire industry. However, when you actually look at the law, that assumption proves not to be true. Even though an individual mandate brings in millions of new users, insurers will have a hard time expanding their bottom lines.<\/p>\n

Look at what they will no longer be able to do:<\/p>\n