The Affordable Care Act drives the bull market in health insurance

The S&P 500 has risen more than 300% over the past nine years. The S&P managed care sector, which includes the country’s largest health insurers, grew more than 1,100% over the same period.

Why it matters: This comes as a big surprise to some analysts who thought the ACA was bad news for the insurance industry in 2009, reports CNBC.

Flashback: Insurers’ stocks were particularly low in 2009 when the entire stock market bottomed out in the recession, partly as investors worried about the rules for the future ACA.

Surprise! Giving millions of new customers to an industry whose purchases are largely subsidized by the federal government is actually pretty good for bottom line results.

Between the lines: The ACA’s Medicaid expansion was its greatest blessing, according to CNBC, as so many states switched to Medicaid Managed Care so that private insurers could manage their programs.

  • Diversification – like UnitedHealth Group’s growing Optum unit – also helped.

The biggest winners per CNBC:

  • United’s shares are up 1,400% since 2009. Centene is up 1,800% and Medicaid insurer WellCare is up 4,000%.

Wall Street is not worried about the future. Despite their panic over the ACA in 2009, at least some investors are no longer even concerned about the growing popularity of depositors.

  • “Even if it was Medicare for everyone, it would probably be Medicare Advantage for everyone,” Deep Banerjee, an analyst at Standard & Poor’s, told CNBC. “Healthcare today is a public-private partnership … it is very difficult to see a system without a private actor being meaningfully involved.”

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