UnitedHealth Group Inc (NYSE:UNH) is the biggest healthcare insurer in the U.S. by market cap. Its rivals Anthem Inc (NYSE:ANTM), Aetna Inc (NYSE:AET) and Cigna Corporation (NYSE:CIG) are at least a third smaller than UNH. And all their efforts to take on UNH by merger and acquisition has come to naught.
That put UNH in an interesting position. On one hand, being the biggest insurer in the US during so much upheaval regarding healthcare could make it the most vulnerable insurer out there. On the other hand, its size could make it too big to fail and guarantees that it will have a seat at the table when new healthcare laws are hammered out.
Now if you know anything about Washington, you know that most of the politicians there are bought and paid for by corporate interests. That the ‘K Street lobbyists’ have a large hand in writing important policy and then just hand it to friendly congressmen and senators to get it put into legislation. This is neither new information nor a new development.
The point is, whatever happens with Obamacare and Trumpcare, UNH’s voice will be heard and respected.
And also bear in mind that what recently got passed isn’t going to be anything close to the Trumpcare that gets through both houses of Congress. The House passed a repeal and replace bill so the president could celebrate a major victory in his first 100 days. It was a political gesture to show American voters that a Republican Congress and president could work together to get Washington working again.
But the fact is, few have read the entire thing. No studies have been made of the costs or consequences. And the legislative process is built to slow down fast-moving bills so that there isn’t a flood of bills authorizing something and then another flood removing something.
First the House drafts a bill. Then it goes to the Senate. The Senate then marks up the bill and sends it back to the House. Both houses then go into “conference” to work out their differences. Then, the new bill goes back to the House and Senate for another vote.
This takes time. And that time works in UNH’s favor.
About a month ago, UNH released its first-quarter earnings and they were very respectable, especially given its size. Revenue was up 9%. Premiums were up 12%. Investments (the portfolio it manages with all the cash from premiums) was up 21%.
Among its rivals, UNH has not been seeing the love that the others have. But its time has come. The big insurers will do well under Trumpcare, since they will certainly have a seat at the table. UNH will have the biggest chair and the most headroom for growth.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
