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Gripes About Obamacare Aside, Health Insurers Are in a Profit Spiral

UnitedHealth, the biggest of the managed care companies, with a market capitalization that is now more than $160 billion, returned 480 percent, dividends included. An investment of $100 in the company’s stock when Obamacare was signed into law would be worth more than $580.50 today.

“If Obamacare has been bad for the managed care stocks, why have they performed so well under it?” asked Paul Hickey, a founder of Bespoke Investment Group. “And do they really need to be rescued by Congress?”

The answers are complex but boil down to this: Basically, several analysts on Wall Street and in Washington said, the underlying businesses of the big managed care companies have actually done extremely well under Obamacare. They have run into some problems but are hardly in need of a rescue.

The companies have notched profits — from expansion of Medicaid, for example, and from services aimed at cutting medical costs — while learning how to insulate themselves from parts of the law that have crimped their income. They have diversified, earning money from businesses that include data management, outpatient clinics and surgical services, as well as traditional health insurance.

“The successful managed care companies, and UnitedHealth in particular, have figured out how to prosper in almost any environment — and to insulate themselves from issues that become a problem,” said Gary Claxton, director of the health care marketplace project for the Kaiser Family Foundation, a nonprofit dedicated to health care policy. “They are making a lot of money from government programs like Medicaid and Medicare — and they are likely to keep doing so,” he said, regardless of what happens in Washington.

UnitedHealth, the industry bellwether, has reduced its exposure to what was its biggest problem in Obamacare: money-losing insurance that it sold in public exchanges to individuals, who often…

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