Medicaid HMOs Soar on Obamacare Victory
"Stocks appear to be trading on some disappointment that the guaranteed issue aspect of the law wasn't struck down," said Windley. "The diversified managed-care companies are impacted by the fact that ... somebody who wants insurance, they have to offer it to them, and they have MML floors -- the margin limitations on their business."
Minimum medical loss ratio is like the inverse of gross margin, or your cost of goods divided by revenue.
In a previous interview, Chris Rigg, a senior health care analyst at Susquehanna Financial Group, said that small group and individual health insurance business companies must spend at least 80% of premium dollars on medical care, and 85% for large group market, or else the company has to rebate money to consumers.
Diversified health care stocks jumped in late March on sentiment that the Supreme Court would strike down Obamacare, but the winners were those investors who bet on Medicaid expansion to remain and Obamacare to be upheld entirely.
-- Written by Joe Deaux in New York.
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