The Health Insurance Business
The Helical Portfolio owns two health insurers, Wellpoint and Heath Net. Health insurance, like other forms of insurance, is likely to be with us for quite some time. But in what form? Currently, size matters, as contracts with large and multi-locationed employers are key. Yet, change is here. Exchanges are now letting consumers select, a process that isn't easy. And we may well move increasingly from a dominent 'employer provided' to 'empolyer reimbused' model. Who wins there? Local 'narrow network' providers have done well on exchanges (MA model), as they can pass on cost savings with limited networks.
I've heard in a couple of places that the 'large insurers' will struggle in the coming years (like perhaps Wellpoint). One venture forum (Xconomy) noted 'large insurers are dead, but just don't know it yet'. And there are articles like this that imply the ACO model, once it gets better established, may well take on the insurace aspect as well.
I think this may be likely, but not soon, and likely not so simple.
For now, I'm content to own insurers, with a focus on ones that have noted exchanges and individual consumer facing business practices are a large part of their strategy. But .. times they are a changing, so I'll need to keep a close eye on them, which is a shame as close attention tends to lead to over reaction among investors.