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3 Healthcare Stocks Hurt by Obamacare Regulations

Healthcare stocks could be forced to broaden their networks

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Healthcare Stocks: UnitedHealth Group (UNH)

healthcare-stocks-UNH-stockUnitedHealth Group (UNH) has the largest health plan among U.S. healthcare stocks. It’s a major player in the Medicare and Medicaid space — and that’s where it may face the greatest headwinds this year and into 2015 if the draft rules take effect. UNH also competes for business health plans and corporate self-insurance.

UNH stock reported strong fourth-quarter earnings last month — profit of $1.41 per share up from $1.20 per share a year earlier.  But CEO Stephen Hemsley still warned that the costs of implementing Obamacare and cuts in the Medicare Advantage program would negatively impact earnings for UNH stock this year.

However, UNH stock is already finding ways to combat those costs. Plans include reducing its provider networks — UNH’s Medicare Advantage network, for example, will shrink by 10% to 15% this year, according to published reports. UnitedHealth’s Obamacare strategy is aimed at using lower than average premiums to attract high volumes of insurance exchange customers.

To offset those lower premiums — and a new health insurance tax — UNH has cut costs by shrinking those networks. But the new regulatory review could undo that strategy, putting significant pressure on UNH stock and other healthcare stocks.

Article printed from InvestorPlace Media,

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