Who says Barack Obama is bad for Corporate America?
Sure, the president is still not exactly a BFF of the big banks. But there’s one big industry group that owes a huge debt of gratitude to President Obama: health insurers, many of which are based in or have significant operations in Hartford. UnitedHealth reported earnings that topped forecasts last week, sending its stock price to a new all-time high. UnitedHealth, with major operations in Hartford, has outperformed the broader stock market by a wide margin since the Affordable Care Act, or Obamacare, was signed into law in March 2010.
Simply put, greater access to health insurance has led to more customers for the insurance giants. The other four members of the so-called Big Five health insurers — Aetna, Cigna, Humana, and Anthem (formerly WellPoint) — have all beaten the S&P 500 over the past five years or so as well.
“There is greater demand for health care and that has improved profits for insurers and hospitals,” said Phil Orlando, chief equity strategist at Federated Investors.
Now it’s true that plans offered as a result of the Affordable Care Act are not as profitable in the short-term. UnitedHealth said last week that ACA fees weighed on its earnings last year.
But that isn’t stopping UnitedHealth and its competitors from trying to get approved to offer plans on even more public exchanges in the coming years.
Obamacare isn’t the only reason why health insurer stocks have been so hot though. They are part of a broader rally in the health care sector.
Many healthcare companies have yields that are significantly higher than the puny yields investors get from buying long-term U.S. Treasury bonds.
