Obamacare Employer Coverage Mandate Delay an 'Incrementally Negative' for Managed Care Companies

July 3, 2013 6:54 AM EDT
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Managed care stocks are on watch Wednesday after the Obama administration abruptly announced a delay in a key provision that mandates companies with 50 or more workers to cover their workers or face a fine of a much as $3,000 per employee.

The delay will push the mandate back one year from 2014 to 2015, and importantly postpones the date beyond next year's midterm elections.

Deutsche Bank analyst Scott Fidel said the announcement "clearly illustrates the complexities involved in implementing this massive piece of legislation."

The analyst said the news in an "incrementally negative" for managed care companies but probably not a major game changer.

"Because this change to the employer coverage mandate is only a one year delay, we don't believe this will change an employer’s long term calculus in determining whether to dump coverage since they will still have to start paying fines in 2015," he said. "However, the move will clearly limit incremental growth of employer sponsored insurance (ESI) in 2014 that may have occurred as some employers began to offer health benefits to avoid the penalties."

Managed care stocks to watch include: Humana (NYSE: HUM), UnitedHealth Group (NYSE: UNH), Cigna (NYSE: CI), Aetna (NYSE: AET), HealthNet (NYSE: HNT), WellPoint (NYSE: WLP).

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