Stocks in health insurance companies hit all-time highs this week amid news that the firms added millions of customers thanks to the Affordable Care Act.
The Standard & Poor's (S&P) 500 Managed Health Care Index hit its highest level since 1994 yesterday, according to Bloomberg. UnitedHealth in particular reached its highest share price ever, $109.32, after reporting its results for the fourth quarter of 2014. Shares of Aetna, Anthem, Cigna and Humana also hit record highs Wednesday.
All told, the Big Five for-profit insurers have consistently outpaced the S&P 500 since 2010, CNN Money reported.
Between Medicaid expansion and the insurance marketplaces, 15 to 16 million Americans have obtained healthcare coverage under the ACA, including roughly 10 million who were previously uninsured, Leerink Partners analyst Ana Gupte told Bloomberg. "That's new growth that this industry never experienced before," she said.
UnitedHealth hit its high despite paying $1 billion in taxes and fees under the ACA, which weighed heavily on its 2014 earnings, CNN said. The insurer plans to keep expanding nonetheless and is eyeing a 2017 entry onto the California insurance exchange, even though Covered California rejected UnitedHealth for the 2016 plan year.
Hospital stocks also had "banner years" in 2014, CNN said. This is consistent with last summer's earnings reports, when hospitals revealed high utilization rates and payers outlined slower cost trends as a result of higher membership.
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