You have health insurance, but you cannot afford surgery? You should have bought HUM stock.


Obamacare was signed into law on March 23, 2010.  However, one year earlier in March of 2009, after Obama's election, drafts of the bill were being circulated within the insurance industry, and amongst the staffs of the politicians they helped to get elected. Although Nancy Pelosi is famous for saying, "We have to pass the bill to find out what’s in it,” that was not the case for the insurance company insiders that were actually drafting the bill.

Since the inception of Obamacare, United Healthcare stock has increased more than 340%, and Humana stock has increased more than 440%; this appreciation is in addition to the quarterly dividends HUM has paid since June 28, 2011This impressive feat may come as a surprise to you, dear Zerohedge reader, as I doubt you will have heard about these great American success stories on television.  Can you name the CEOs of Humana, or United Healthcare?  No?  Hmmm.  I wonder why?  One might think President Obama would want to hold up these companies as shining symbols of, "The Recovery."


Google chart


How do health insurance companies like Humana make money?  They don't provide healthcare!  Very simply, they charge patients premiums, and pay healthcare providers fees.  They are intermediaries, middlemen.  When they charge higher premiums, and pay providers less, or nothing (via high deductibles and high coinsurance), then they are more profitable.  They take this profit and invest it.

Why have United Healthcare, Humana, and the healthcare insurance companies done so well since Obamacare?

  • Have the health insurance companies significantly increased investment returns?  Maybe, but not enough to justify their stock's return vs the broader market.
  • Have the health insurance companies significantly increased covered lives?  No. 
  • Have United Healthcare or Humana significantly increased market share?  No.
  • Have United Healthcare or Humana significantly increased premiums?  Maybe, but not enough to justify the stock price.
  • Have the health insurance companies significantly decreased provider payments?  Yes. 

How?  Just as cereal manufacturers decrease their costs by putting less cereal in the same box but still charge you the same price, health insurers have raised the deductible amounts and co-insurance amounts, but not lowered premiums.

Coinsurance:  A cost-sharing requirement of some insurance plans where the patient assumes a percentage of the costs for covered services after the amount of the deductible has been met.  Coinsurance is described as a ratio, for example 30/70, meaning the patient is responsible for paying 30% and the insurance will pay 70% of the allowable.

Deductible:  The amount paid by the member before insurance will begin to reimburse services.  It is reset annually, and based on the level of benefits or amount of premium paid.  For example, with a $1,000 deductible the patient must pay medical providers for the first $1,000 of allowable expenses incurred by the patient each year, after which costs may be split according to a coinsurance arrangement, and/or may be limited to the patient’s out of pocket expenses.

Premium:  The monthly amount enrollees pay the insurance company to be covered.


What is your premium, deductible, and coinsurance?  What were they 6 years ago?  Many, if not most, of the Obamacare plans actually in use today are $5,000 in-network deductibles, $10,000 out-of-network deductibles, and 30% coinsurnace.  Few specialists signed up for the Obamacare plans because of the low fees, so people are likely to have to pay both the $5,000 in-network deductibles, and $10,000 out-of-network deductibles every year before the insurance will begin to reimburse services.

In summary, 1) you are paying more before the insurance company begins to reimburse services, and 2) you are paying a higher percentage of the costs after the insurance company begins to reimburse services, and 3) you are required by law to purchase health insurance...therefore United Healthcare stock has increased more than 340%, and Humana stock has increased more than 440%!   

You have health insurance, but you cannot afford surgery?  You should have bought HUM stock.


Just like I said in January of 2013...

Bait and switch.

Obamacare is of, by, and for the healthcare insurers.  It is designed to remove competition and assure profits for healthcare insurers, exactly as the Federal Reserve Act does for the big banks.

HIPAA was not about privacy for the patient.  It is solely to guarantee healthcare insurers access to preexisting conditions.

None of this will change until bribery campaign contributions are reformed.


How does Obamacare assure profits for the health insurers? 

The fine print, Section 2718 of the Public Health Services Act, implements the minimum medical loss ratio requirement, aka guaranteed profit requirement.


What does this mean for those investing in or practicing healthcare in America?

Well, like I said back in October of 2013...

The following provision, in a nation of deadbeats that cannot put their hands on $2,000 cash for an emergency, when combined with $2,000 deductibles and 70/30 co-pays, is going to be the mother-of-all-unintended-consequences.

Furthermore, health plans from the marketplace could present financial obstacles for physicians, because those health plans are required to have a 90-day grace period for policyholders that do not pay their monthly premiums on time. While other health plans would cut off coverage if a patient did not pay their bill on time, the health plans offered in the marketplace would still indicate the patient was covered during that grace period, and retroactively revoke payments to the physician for treatment provided during that time. In those situations, the doctor would be forced to seek payment from the patient for services already provided.


Short providers, long insurers, long collection agencies.


The next time you see your congressman, ask how his or her Humana stock is doing.  The next time you pay your health insurance premium, you may want to stuff some money in the mattress, too, so you can afford the deductible and co-insurance.

Peace be with you!