Justin Lake (formerly of UBS and now of J.P. Morgan) says he has a “modestly constructive” outlook on health plans. Not exactly a ringing endorsement, but given all the uncertainty, an understandable one. Lake has initiated coverage of the sector with buy ratings on Amerigroup, Centene, Cigna and UnitedHealth. He has hold ratings on Aetna, Coventry, Health Net, Humana, Molina and Humana. He has no sell ratings.
Concerns on cost trend acceleration will prove unfounded with our not for profit industry conversations and hospital/physician data indicating no pickup. While the Supreme Court decision adds uncertainty, we think it is outweighed by potential positive…November elections as well as government driven growth opportunities….That said, we see little upside to Q2 numbers while earnings visibility moderates as cost trend flattens.
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“Government-driven growth opportunities” is the worst thing that can happen to our country. Health care, like all other personal needs, is something that we buy for ourselves, not something that some of us get for free from government, while the rest of us are forced to pay for those free riders with extra taxes, extra premiums and extra costs.
The threat of health plans benefiting from the forced redistribution of wealth is scary, especially since they will be paying out claims to people who don’t feel the need to conserve their health or our resources. With Obama’s stated intent to circumvent any Supreme Court decision that is adverse to Obamacare, our uncertainty soars and our freedom diminishes into a nightmare of serving our tyrants and their privileged freeloading voters.