Obamacare Bringing Insurers, Hospitals Big Profits

by Warner Todd Huston

Jul 31, 2014 4:43 AM PT

Experts, insurers, and hospitals still don't have enough data to say if Obamacare is going to be good for the country, but two things seem certain thus far: hospital chains and insurers are raking in the dough while patients are paying higher costs for insurance.

Bloomberg reports that HCA Holdings Inc. (HCA), "the largest for-profit hospital chain," and WellPoint Inc., a for-profit healthcare insurance provider, both raised their forecasts after the two companies made record profits due, they assume, to Obamacare.

Another company, LifePoint Hospitals Inc., reports that their earnings increased $13 million in the second quarter this year.

"Obamacare's turned out to be quite good for health-care companies," healthcare investor Les Funtleyder told Bloomberg.

The business reporters went on to note that several other large healthcare companies, such as UnitedHealth Group, Inc., are also seeing higher profits.

One reason these healthcare companies are raking in record profits is because the insurers are getting new clients forced into the system by Obamacare.

Bloomberg claimed, "Taxpayers too may be benefiting from the law approved in 2010." Yet, reading further into the story, this rosy claim is not buttressed by facts. It seems that there are a lot of assumptions being made on whether or not Obamacare is actually a boon to Americans.

Even as Bloomberg says several times that Obamacare is good for Americans, at the same time the story warns that "it's early in the life of the law" to say for sure and that "questions remain" on whether or not the recent drop in healthcare costs really is attributable to Obama's Affordable Care Act or if it is merely a result of a slow economic recovery.

Further, Americans still don't like the law. "Recent polls indicate that more Americans remain opposed to the health-care law than support it, although that includes people who think it isn't liberal enough," Bloomberg writes.

Others think that the slightly improving economy may be responsible for the increase in healthcare spending by Americans.

"We may need to see a couple more quarters to parse out who's going and why," Funtleyder told Bloomberg. "If it's the individually insured who didn't have insurance going to the hospital, it's Obamacare. If it's everybody, it's probably the economy."

Finally, all this depends on court challenges, further government actions and tinkering with the law, and the stability of government subsidies and state exchanges, all things that are not known quantities and any one of which could upset the apple cart.

Follow Warner Todd Huston on Twitter@warnerthuston or email the author at igcolonel@hotmail.com.

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