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While just about all healthcare stocks seem to be getting a boost from the Affordable Care Act (ACA), otherwise known as Obamacare, one subgroup – the health insurers – figures to get an outsized benefit from the healthcare law.
And their stocks are already reflecting this advantage.
In the past six months, the iShares Dow Jones U.S. Health Care ETF (NYSEARCA: IHF), which owns all of the Big Five insurers – Aetna Inc. (NYSE: AET), Humana Inc. (NYSE: HUM), WellPoint Inc. (NYSE: WLP), Cigna Corp. (NYSE: CI), and UnitedHealth Group Inc. (NYSE: UNH) – is up more than 11% year to date.
All five are trading just under their all-time highs.
So far this year, the sector is up over 10%, while the Standard & Poor's 500 index is up just 7.5%. Last year, as investors were anticipating the official launch of Obamacare in October, the healthcare sector rose 39%, second only to consumer discretionaries.
And according to Thomson Reuters, the profit estimates for healthcare stocks this year have increased to 12.2% from 8.3% as of Jan 1, while the forecasts for most other sectors have declined.
All this is before the ACA is even fully implemented.
In fact, if you take a step back, you can see that the health insurance stocks have been steadily rising since the ACA was signed into law in March of 2010. The iShares Health Care ETF, for example, is up nearly 97% in that span, well above the 70% gain for the S&P 500.
So, yes, the health insurance industry is definitely in the pink right now. But how can investors be sure Obamacare will keep healthcare stocks flourishing?
Well, because the health insurance industry planned it that way…
How Obamacare Will Feed the Profits of Healthcare Stocks
As the ACA continues to unfold – it won't fully come into effect until 2020 – it's becoming increasingly evident that the health insurance company lobbyists did a great job of ensuring the law would pump up their profits…
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.