With the increase in the overall rate of life expectancy, people have started taking a course on Medicare and Health insurance. This would eventually serve as a cushion during their phases of need. A direct result of the previous action is the swelling growth of opportunities for investors in health insurance stocks. They would later account to be profitable. Before diving into in-depth details about health insurance stocks and their investment opportunities, let us begin by exploring health insurance in general.
What is Health Insurance?
Health insurances are indemnities provided by companies that will secure the medical needs of the customer and their families. They will do so in exchange for a certain amount deposited annually to them.
The medical services include covering the bills generated during a visit to the hospital. They also include covering the costs for:
- drug prescriptions
- procurement of health amenities
- an unexpected visit to the doctor or emergency room.
These schemes come with distinct clauses and coverage. It all depends upon the money that you are willing to invest in a year. Also, health insurance can include only a single entity or the whole family. Including pets and certainly, the amount demanded by the company would be more in case of the latter.
Health Insurance Stocks
Owing to the rate of high employment in the country, workers with a stable income are purchasing health insurance. They want to ensure the well-being of their families. This consequently leads to an increase in expectations for an investor. In this list below, we will be showing you the three most significant health insurance stocks of 2019. You can explore them and wisely conclude.
UnitedHealth Group (NYSE: UNH)
The UnitedHealth Group is considered to be the world’s largest and most reliable insurance company. Moreover, they have more than 50 million customers enrolled with them and thereby own a market capital of $235 billion.
The reputation of the UnitedHealth Group has always been on the positive side of the radar. This is due to the swift and effective services for their members. A pointer that might hold more relevance here is that its health insurance prompts 80% of the Group’s total revenue. The company mainly has four programs to offer. They are:
- Medicare and Retirement
- Employer and Individual
- Community and State
Out of these four, the most common insurance operation is that of Medicare and Retirement. They are counting on the factor that people are more keen on securing their lives after retirement. One of the reasons is the fact they do not have the continuous flow of income to lean upon.
Apart from the gradual development experienced by these business sectors, UnitedHealth Group is outshining its records through the Optum plan that involves OptumHealth, OptumInsight, and OptumRX. These three segments have different distinct performances assigned to them.
- OptumHealth takes care of ensuing health management and its financial services,
- OptumInsight covers the healthcare technological arena and
- OptumRX is the leading PBM or Pharmacy Benefits Manager.
The Optum plan has borne better results for the Group in comparison with their health insurance.
Anthem (NYSE: ANTM)
With a market capitalization of $73 billion, the health insurance company of Anthem is second in the list of the most significant insurance stocks. With members coming over from 14 states across the country, Anthem is considered to be the most significant plan provider of Blue Cross and Blue Shield.
Moreover, their subsidiaries extend to all 50 states. According to statistics, Anthem provides services to more than 40 million individuals. Like the preceding group, this company too dispenses its services in three fragments. They are:
- Commercial and Specialty
- Government Business
The first section targets managed care products and services. The Government business that mainly focuses on Medicaid comes next.
Medicare and FEP (Federal Employee Program) plans, while “other” successfully include and eliminates expenses that are not attached to any of the previous categories.
The most significant area of income for Anthem is through their Government business that sums up to 60% of the total revenue because of the supporting growth provided by the Medicare plans.
But, considering the numbers, their commercial and specialty business is hailed as more profitable. Additionally, with the launch of a new PBM by the name of IngenioRx lined up for the future, Anthem is bound to draw more investors.
CVS Health (NYSE: CVS)
In the world of pharmacies and PBMs, CVS Health is undisputed and the market capitalization of which amounts to $72 billion. In 2018, CVS Health successfully acquired Aetna. That has helped them to improve long-term growth strategies through the propagation and aim to “create a new front door to healthcare.”
Even though CVS Health is trying to employ Aetna at the forefront, it has already started making mighty contributions to the profit of the company. It is attaining almost 30% of the total revenue. The reason for this development might be the increased demand for Medicare products.
However, the dominating revenue collector for CVS Health remains to be their CVS Caremark PBM and Silverscript Medicare Part D prescription drug plan business. Also, the company’s Long-term Care (LTC) business is the second highest contributor to revenue.
The Bottom Line
You should do detailed and intensive research on the investor’s part that includes collecting information. Diligently comparing them, keeping in mind their previous years’ performance. This way, you can reach a calculated decision. After all, the better you know a company and its strategies, the easier it will be for you to plan an investment that will bring profit.