The Impact of Obamacare on America's Health Insurers

Now that Obamacare is law, it's time to take a look at one of the big beneficiaries of the new mandate; health insurance companies.

Let's start with Blue Cross Blue Shield, owned by WellPoint Inc.:

Over the past year, WellPoint's (WLP) stock price has risen by 42.5 percent from $53.69 to its current level of just over $87, hitting a high of $90 in September 2013.

Here's how UnitedHealth Group's (UNH) stock has performed over the past year:

Over the past year, UnitedHealth Group's stock price has risen by 27.8 percent from $51.09 to its current level of just under $72, hitting a 52 week high of $75.88 in September 2013. 

Here's how Aetna Inc's. (AET) stock has performed over the past year:

Over the past year, Aetna stock price has risen by 59.5 percent from $40.32 to its current level of $66.44, hitting a 52 week high of $69.19 in September 2013.

Here's how Humana Inc's (HUM) stock has performed over the past year:

Over the past year, Humana's stock price has risen by 30.4 percent from $63.93 to its current level of $96.54, hitting a 52 week high of $99.85 in September 2013.  

Lastly, let's look at the stock price performance for Cigna Corp.:

Over the past year, Cigna's stock has risen by 62.2 percent from $48.68 to its current level of just over $79, hitting a high of $84.68 in September 2013.

Lest you think that I've forgotten and to help put the aforementioned into perspective, here's how the S&P 500 has performed over the same timeframe:

Over the year, the S&P 500 has risen 15.7 percent, a far cry less than the percentage rise in all of the major American health care insurers.

Now, let's switch gears for a minute.  Here is a look the lobbying expenditures of the five aforementioned health insurers:

Blue Cross Blue Shield:

United Health:

Aetna:

Humana:

...and lastly, Cigna:

Obviously, insurance companies strongly support the concept of a government mandate that requires individuals and their employers to purchase health insurance coverage because it would add huge numbers of potential subscribers to their customer base.  The substantial increase in the stock prices of the five companies I've selected for this posting bear that up.  With the Census Bureau data showing that 48.6 million Americans had no health insurance in 2011, the mandate could potentially be a huge addition to the bottom line of insurance companies.

To close, as we all know, CEO's of major corporations are extremely well compensated, generally in the form of company stock of one form or another.  If we look at the compensation package for Stephen J. Hemsley, President and CEO of UnitedHealth Group for 2012, we find the following:

That's $7 million in stock awards alone or just over half of his annual compensation for 2012.  Mr. Hemsley was granted 181,200 long-term performance shares and an additional 67,269 RSUs.  On the grant date, the fair value of the RSUs was $3,500,006.

In addition, here is a look at Mr. Hemsley's outstanding equity awards, keeping in mind that the share price has risen substantially since the issuance of the 2013 Annual Report, pushing the value of his holdings ever higher:

While Obamacare will certainly provide a necessary benefit for uninsured Main Street Americans, it appears that it will provide an even greater benefit to health care insurance providers and their shareholders but, most particularly, those who spend their working days on the executive floor.

Don't say that the current administration didn't do anything for them.  I guess that all of that money spent on lobbying was worth it in the end.  From what I've shown here, the impact of Obamacare on America's health insurers is all positive, positive, positive!