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

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

PR Newswire

CHICAGO, Nov. 28, 2012

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).


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


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

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

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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