With just two days left before we click over to a new year and the actionable component of the Patient Protection and Affordable Care Act, also known as Obamacare, goes into effect, questions involving how Obamacare will effect individual citizens couldn’t be of higher interest.
Obamacare itself is a major overhaul of our health-care system, and any overhaul is bound to have its kinks and gray areas that need to be worked out. Throughout the first three months since the Obamacare state and federally run health exchanges opened for business, most of that time span has been filled with IT-based technical glitches that drastically slowed enrollments.
Although the latest Obamacare enrollment figures would suggest that we’re well beyond 1 million cumulative enrollments, roughly two-thirds of those enrollments came over just the past three weeks as the coverage cutoff for Jan. 1 (which was Dec. 24) rapidly approached. U.S. citizens are creatures of habit, and few of us like to pay our bills early; thus, the affinity for consumers to wait until the last possible moment to sign up for health insurance.
Source: White House on Flickr.
Does this latest poll shock you?
What’s of particular interest, and concern, is the latest research poll (link opens a PDF) conducted by CNN/ORC International between Dec. 16 and Dec. 19 (i.e., right before the coverage cutoff deadline) that demonstrated a significant deterioration in public opinion toward Obamacare.
According to CNN/ORC International’s poll, the percentage of people who favor Obamacare is at a two-and-a-half year low of 35%, while opposition to the law is at an all-time high at 62%. Perhaps even more disconcerting, the number of people surveyed who responded in the affirmative that they’d be able to keep their doctor fell by four percentage points to 61% from the 2009 survey, while the number of respondents who believe Obamacare will increase their health-care costs rose a whopping 16% to 63% between September 2009 and December 2013, with those expecting a decrease falling to just 7%.
Here’s why these figures are worrisome
The findings of this poll are particularly interesting for two reasons.
First, it’s a bit odd to see opposition to Obamacare building now that Healthcare.gov has finally been fixed and is usable by the majority of citizens in the 36 state network that it covers. Previous polls had demonstrated that favorability toward the law had stabilized and had even improved slightly heading into the tech surge, so this sudden reversal could be a bad sign when it comes to meeting the 7 million sign-ups that the Department of Health and Human Services is targeting.
The second notable factor here is that this drop-off in support follows the Centers for Medicare and Medicaid Services admission that Obamacare will not reduce costs for everyone and that millions of Americans could lose their health insurance coverage on Jan. 1 as previously acceptable insurance plans don’t meet the beefed-up requirements inherent in the PPACA. According to Forbes‘ estimates, some 6 million people could be set to lose their policies in just two days, creating an opening for those citizens to claim a hardship that’ll potentially land them outside the scope of the individual mandate.
This last point is particularly important, because the HHS is counting on the perception and forecast of lower health-care costs as a driver to aid in their efforts to sign young adults up for health insurance. Young adults are the plain-as-day ingredient needed to make Obamacare a success, and they’re the key component insurers need to help lower their short-term insurance costs. Adverse selection would suggest that the sickest and most in need of care are going to sign up first, so if we want insurers to keep their premium costs reasonable next year, we had better hope that a significant number of young adults sign up for health insurance.
Source: National Institutes of Health, Wikimedia Commons.
What does this mean for you as a consumer and investor?
While this ultimately is just a poll and we should really allow the actual data to speak for itself, there are a few implications here for consumers and investors.
From a consumer perspective, growing opposition to the law leaves the possibility open that considerably more people than anticipated will choose not to purchase health insurance and will instead pay the individual-mandate penalty. While the fees collected from this penalty are expected to help expand Medicaid around the country, a lack of healthy young enrollees will almost assuredly push premiums higher when open enrollment kicks off for 2015 on Nov. 15, 2014.
As an investor, negative sentiment as we’re seeing here could portend bad news for insurers, hospitals, and medical-device makers, but it creates an intriguing opportunity for private insurance platforms and health-care IT-infrastructure companies.
As opposition to Obamacare grows, the most obvious losers if fewer people were to sign up would be national insurers such as UnitedHealth Group Inc. (NYSE:UNH) and hospital operators such as Tenet Healthcare Corp (NYSE:THC).
Insurers would lose out based on our discussion of adverse selection noted earlier, while hospital operators such as Tenet Healthcare Corp (NYSE:THC) would be treating fewer insured patients than expected, reducing its doubtful revenue accounts by a smaller figure than projected. In turn, this extra revenue collected by hospital operators is expected to fuel investments in the latest medical device technology. If that revenue isn’t there, a medical-device maker such as Accuray Incorporated (NASDAQ:ARAY) could face a double-whammy. It would be required to pay the 2.3% medical-device excise tax as mandated by the PPACA, and it could see sales slump, as hospitals simply don’t have the extra revenue to purchase the latest in radiation therapy devices such as Accuray Incorporated (NASDAQ:ARAY)’s TomoTherapy system, which costs in excess of $3 million.
Let’s be clear that most consumers desire to have health insurance and are in favor of universal health-care reform — it’s just that most aren’t in favor of Obamacare for varying reasons. What eHealth, Inc. (NASDAQ:EHTH) provides is an alternative platform to Healthcare.gov for consumers to compare health plans. While it all leads toward the same goal of signing up people for health insurance, eHealth’s perceived separation from the state and government-run exchanges is propelling its membership rapidly higher.
Cerner Corporation (NASDAQ:CERN), on the other hand, will benefit as health-care facilities prepare for weaker-than-expected Obamacare enrollments and look to cut costs by improving their operational efficiency. Lately, cost-cutting has been a big driver of bottom-line growth, so look for Cerner to continue to play an important role in this effort moving forward.
The article Does This Latest Obamacare Poll Surprise You? originally appeared on Fool.com.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends UnitedHealth Group.
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