Who would suffer if there’s a delay
As should come as no surprise, from a business perspective, insurers and hospitals would be on the outside looking in if there’s an insurance exchange delay of any form. WellPoint, Inc. (NYSE:WLP) and CIGNA Corporation (NYSE:CI) would certainly feel the pinch, as both made sizable transactions (WellPoint, Inc. (NYSE:WLP) purchased Amerigroup for $4.5 billion and CIGNA Corporation (NYSE:CI) bought Healthspring for $3.8 billion) following the passage of Obamacare in the hopes of adding some of the 16 million newly eligible Medicaid patients under the proposed Medicaid expansion. If the opening of the health-insurance exchanges experiences any delays, then these insurers are not going to meet Wall Street’s already pumped up profit expectations in 2014.
Hospitals are also on the hook. The nation’s largest hospital operator, HCA Holdings Inc (NYSE:HCA), wrote off 10.25% of its revenue, $3.77 billion, in 2012 just because of uncollected services rendered. In other words, it provided nearly $3.8 billion in care to people who were uninsured and couldn’t pay. HCA Holdings Inc (NYSE:HCA) is counting on everything to go smoothly with the implementation of this law so that its doubtful account provision will begin to fall and its profits can head higher.
But don’t forget about individuals, either. There have been quite a few people who’ve had their health insurance dropped by their employer who expected the employer mandate to go into effect on Jan. 1, 2014, so these folks will be looking for a new insurer to call their own in a matter of weeks.
Is it time to worry?
Even though Oct. 1 is less than three weeks away, I don’t think the time to worry has arrived just yet — and I’ll tell you why. A precedent has been set in previous health-reform attempts that the government will scramble at the last second to get everything online, and that there will be technical glitches, but that it will all eventually work as planned.
Don’t believe me? Back in December 2003, when George W. Bush signed Medicare Part D into law — a comprehensive drug benefits reform designed to help older Americans — and leading up to its Jan. 1, 2006, full implementation date, more people than not viewed the bill unfavorably. Furthermore, even though the implementation date was met, technical glitches did arise during the enrollment process for some individuals. Is this sounding at all familiar yet? Despite the glitches, following a few weeks of frantic fixes everything has been running properly with Medicare Part D enrollment ever since.
I suspect we’ll see something similar occur with Obamacare. We may not see as many technical snafus as we witnessed with Medicare Part D, but instead we may be subjected to a learning curve as Americans acquaint themselves with the law and become educated about their choices. I highly, highly doubt this will be a smooth transition come Oct. 1, but I also, using previous precedence, I don’t think consumers or investors in the aforementioned stocks have any reason to be worried just yet.
The article With Obamacare Delays Mounting, Should We Be Concerned? originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of, and recommends WellPoint.
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