Wellpoint: Health Care Reform Failure Would Benefit Insurance Company

Wellpoint: Health Care Reform Failure Would Benefit Insurance Company

"Of course, healthcare reform is a double-edged sword for Wellpoint shares. Should reform fail, Wellpoint would be a primary beneficiary." That comes from the first page of the Cowen and Co.'s assessment (pdf) of Wellpoint stock in 2010 and beyond. The argument is simple: Wellpoint's business model is uncommonly concentrated in the individual and small-group markets. Those are the exact markets that health-care reform will drastically change. Those are the markets where people get rejected for preexisting conditions, where insurers spend 30 cents of every premium dollar on administration and where rate hikes are volatile and constant. Health-care reform wants to change all of that, and if it does, Wellpoint's business model will be changed, too.

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