Zacks Industry Outlook Highlights: UnitedHealth Group, CIGNA, WellPoint, Aetna and Humana

CHICAGO, Nov. 28, 2012 /PRNewswire/ -- Today, Zacks Equity Research discusses the U.S. Health Insurance, including UnitedHealth Group Inc. (NYSE:UNH), CIGNA Corp. (NYSE:CI), WellPoint Inc. (NYSE:WLP), Aetna Inc. (NYSE:AET) and Humana Inc. (NYSE:HUM).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at  

Link: http://www.zacks.com/stock/news/87564/health-insurance-stock-outlook-nov-2012

The health insurance industry has confronted many external challenges in the recent past, such as an uncertain regulatory environment, a challenge to meet the demand of more price- and service-conscious consumers, a fiercely competitive market, shifts in customer mix and a slowly recovering economy, just to name a few.

Notwithstanding the headwinds, the industry continued to remain profitable with the top players -- UnitedHealth Group Inc. (NYSE:UNH), CIGNA Corp. (NYSE:CI), WellPoint Inc. (NYSE:WLP), Aetna Inc. (NYSE:AET) and Humana Inc. (NYSE:HUM), among others -- reporting earnings growth and delivering positive earnings surprises in the third quarter of 2012.

The earnings performance at each of these players were primarily driven by industry-wide factors like higher enrollment, increasing premium, lower-than-expected medical care utilization and improving commercial insurance pricing. Most of the carriers even raised their 2012 earnings estimates, which reflect optimism for the fourth quarter results as well.

About the Industry

The health and medical Insurance industry is an integral part of the U.S. economy. According to the Centers for Medicare and Medicaid Services, U.S. health expenditures account for about 18% of the country's annual GDP. According to the World Health Organization, health care expenditure per person in the United States is the highest in the world.

Despite huge sums of money spent on health care, millions of Americans lack health insurance coverage or are underinsured. This was largely attributed to a dysfunctional health care system. To rein in the waste and make health care more accessible effective and affordable, President Obama pushed health care reform in an attempt to overhaul the nation's ailing health care system.

Health Care Overhaul

The Patient Protection and Affordable Care Act (PPACA) was passed in 2010 and marked the beginning of a multiyear implementation process. It is the most substantial overhaul in the history of the nation's health care sector.

The reform was intended to provide coverage to the 32 million uninsured Americans, to make health care facilities more affordable, expand coverage for customers with pre-existing health conditions and keep a check on health insurers.

Certain significant provisions of the legislation were: mandated coverage requirements, rebates to policyholders based on minimum benefit ratios, adjustments to Medicare Advantage premiums, the establishment of state-based exchanges, greater investment in health IT, annual insurance industry premium-based assessment, reduction in Federal assistance on Medicare Advantage, restriction on rescission of policies and elimination of annual as well as life time maximum limits.

The Reform has endured rough patches since its inception, with opponents challenging its individual mandate and Medicaid expansion clause and dragged it to the courts. Insurers were lobbying against most of its provisions and opposition political parties swore to repeal the whole law if they were elected.

But the law survived the challenges with Supreme court upholding the constitutionality of its individual mandate -- the core of the reform. Also, Obama's re-election provides ratification to the health care reform. That said, the full implementation of the reform is far from guaranteed given the substantial leeway states enjoy in enforcing key parts of the legislation, particularly the setting up of exchanges and expansion of Medicaid.

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