UnitedHealth Says ‘No’ To Obamacare — What Will the Market Say?
UnitedHeath (NYSE: UNH) is pulling out of Obamacare in two states, Georgia and Arkansas, because the healthcare giant reportedly lost “hundreds of millions of dollars.” Even though UnitedHealth played a relatively small part in national healthcare picture, it’s still a big enough piece of the nation’s overall healthcare that investors are sure to notice.
Why Pull Out Now?
UnitedHealth was pretty hesitant to get into Obamacare to begin with, so it’s not too surprising that they want out; it took them an entire year to join in the first place. The decision to join is now being looked on as a bad one, causing UnitedHealth’s CEO Stephen Hemsley to say, “In retrospect we should have stayed out longer.”
It was also relatively easy to pull out because of how little of the market UnitedHealth had in those states. In Georgia, for example, UnitedHealth owned only a little under five percent of the market.
What may cause some investors to worry is if they pull out of Obamacare entirely — or if other insurers follow suit.
What Does This Mean for Obamacare?
Given UnitedHealth’s small marketshare, Obamacare won’t be affected all that much. Aetna (NYSE: AET) and Anthem (NYSE: ANTM) are still the two largest players in the Affordable Care Act (ACA) and unless either one of them decides to pull out, the ACA should still be fine.
However, some worry that if UnitedHealth pulled out of two states, it may quickly pull out of others and eventually might remove itself altogether. This is bad news for those under UnitedHeath’s umbrella, but could be potentially good news for the other healthcare giants.
How Does UnitedHealth’s Decision Mean Money for You?
When one of the nation’s largest healthcare providers does something this major the market is sure to move. Investors may laud the decision and start putting more money in UnitedHealth’s hands (since now it won’t be lost in the ACA). On the other hand, they may lament the decision, lose trust in the company, and start selling their shares.
This will also surely affect Aetna and Anthem. The two companies lost major competition in the highly competitive insurance field and their investors will almost certainly be happy.
Expect the healthcare market to be very volatile in the coming weeks.
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