Health Insurance Carrier Stock Performance Has Been Amazing!
United Health Group’s Stock is Up 26% Per Year Since the ACA Was Passed in 2010. That’s the Same Growth Rate as Apple!! That’s More Than TWICE the Growth Rate of the S&P 500.
Anthem’s Stock is Up 21% and Cigna’s Stock is Up 20% in the Same Period of Time.
Why is the Stock of Health Insurance Carriers So Successful? Because of Network Effects.
Health Insurance Carriers Possess Tremendous Network Effects Because They Facilitate the Financial Transactions Between 1) Doctors, Hospitals, Pharmacies AND 2) Payers (i.e. the Federal Government, State Governments, Employers). However, All Network Effects Have a Weakness… People Find a Way to Go Around the Network.
Onsite Clinics, Near Site Clinics, Direct Primary Care and Virtual Primary Care are all Examples of Fixed Cost Direct Care That Go Around the Health Insurance Carrier. Overtime, Healthcare Costs Can Shrink as Payers Move More of Their Budget from Health-Insurance-Carrier-Mediated Variable Costs to Direct Care Fixed Costs.
