Medicare Advantage is the privatization of Medicare. Medicare Advantage will be killed by Obamacare, which reduces payments to these private Medicare plans. Or will it?
In actuality, insurance companies that are highly involved in Medicare Advantage did very well in 2011, as CNN recently reported.
Among the top-performing Fortune 500 stocks of 2011, three – WellCare Health Plans (WCG, Fortune 500), Humana (HUM, Fortune 500), and Centene (CNC, Fortune 500) — were health insurers with a high proportion of Medicare Advantage enrollees. WellCare’s share price has nearly doubled while Humana and Centene are up about 50%.
WellCare’s enrollments jumped 10% in the third quarter, mostly due to an increase in Medicare Advantage members. The increase helped the firm nearly double its third-quarter profits and raise its 2012 outlook.
Humana also reported an 11% jump in third quarter revenue and boosted its 2012 earnings-per-share outlook by roughly 56% after enrollment outpaced the company’s earlier forecasts.
So what do these insurance companies and their investors know that we, the general public, don’t know? Who would think health insurance companies would be such a good investment with Obamacare already in place in some areas (no co-pays for preventive screenings; children up to age 26 allowed to stay on their parents’ employer health insurance plans; reduced payments to Medicare Advantage) and Obamacare lurking on the horizon in others (the mandate; a limit on companies administrative costs, including profit)?