WellPoint is the world’s largest health insurance company, as the parent company, in effect, to 20 statewide Blue Cross/Blue Shield companies. This analyst finds WellPoint to be in an “extremely strong competitive position in a huge market with attractive growth prospects …”
The two key reasons: “The acquisition of Amerigroup, shifting healthcare dynamics.”
Dig deeper, and the analysis boils down to this: Obamacare will profit WellPoint by beefing up Medicaid and driving people off their employer-sponsored plans.
If the law does help WellPoint, that doesn’t mean the law was bad. It just means Obama’s rhetoric, about this bill being the scourge of the health sector, was bogus. It’s worth mentioning that WellPoint’s top lobbyist, Liz Fowler, was a key staffer for Max Baucus’ Finance Committee in drafting the bill, and for Kathleen Sebelius’s HHS in implementing the bill.
Also relevant: The old chief of staff to Tom Carper, a power-broker on Obamacare, became a WellPoint lobbyist as the bill headed to the Senate. And Evan Bayh, who cast a deciding vote to pass the bill through the Senate in late 2009, is married to a WellPoint board member.
Finally, in 2007, WellPoint spent $1.8 million on lobbying the federal government, according to filings with the Senate Office of Public Records. The company exceeded that lobbying total in 2013′s first quarter alone.
Relevant passages from the analysis of WellPoint, via Seeking Alpha:
Combined, the company now serves more than 36MM medical members and has a Medicaid presence in 20 states, which is the largest in the industry …
WellPoint is the exclusive licensee of the Blue Cross and/or Blue Shield brands in 14 different states, giving the company significant brand recognition, which should become increasingly important in an era where medical benefits are procured from exchanges by individuals instead of the decisions being exclusively made by the employer …
WellPoint has invested about $150MM just to prepare for the exchanges, including regional testing of consumers’ preferences for price, brands, etc. WellPoint holds the number one market share in the country in selling directly to the consumer, and is also number one in small group employees purchasing coverage. Over time due to the new regulations, small group and large group markets will start migrating to the individual consumer making the decision as opposed to the employer. I believe that WellPoint has an opportunity to do very well with that new system, and it is just the uncertainty that has led to the mispricing of the stock.