You're watching...
David Windley, Jefferies & Co. managing director and health care analyst, on Medicaid funding and how investors can play up an expansion.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Decayed coverage it's a key provision in president Obama's health care law.
Five Republican governors already have said they will not expand coverage but my next guest says -- -- still stand to gain more find out how.
Joining me is Dave -- -- Jefferies health -- analyst.
-- David thank you for being with us before we get into the stock to -- very quickly is this just a huge bluff because -- tell you Rick parry down in Texas the governor that.
Seems pretty intent on top expanding Medicaid.
You're you're right he does and I think the view there is that their budgets are hard to balance as they stand today and looking forward even out to 2017 the prospect of adding more costs.
From health care standpoint to those budgets.
Is a pretty ominous prospect but I do you think with some of these states perhaps not the most right leaning but some of these states.
It is ideological posturing at this point all right so the big question is how can investors play the Medicaid expansion.
Certainly so there are Medicaid focused HMOs Amerigroup is one of those got bought out -- very nice price by WellPoint.
Yeah our earlier this week that that -- would lead us to another player in the space Centene CNC which is pure play Medicaid HMO.
Also well positioned to benefit from.
-- expansion.
I would also point out though.
The Medicaid expansion is not the only opportunity for these stocks -- dual eligible transition and managed care is another one that is significant and part of the value that -- points on Amerigroup.
So when you say dual eligible you mean Medicaid and Medicare.
Right these are folks that are eligible for both -- okay generally lower income and elderly.
So I would imagine to David Blitzer hospitals could be a bigger winner -- Medicaid expansion because you know they incur a lot of uninsured costs will let.
Not those costs down a little bit.
It is expected to reduce their bad debts essentially shouldn't should increase the number of paying customers walking into the hospital.
Actually -- back to your earlier question which is.
You know are the State's going to continue to hold out and not expand yeah that will leave a lot of their residents still not covered.
Hospitals and physicians are probably have something to say about that you think that that perhaps the Medicaid portion of this is compact over emphasize that there's a much bigger picture here.
I do as we look at -- we see.
For the Medicaid major -- players three buckets of opportunity one is what caught the RFP pipeline another one is this dual eligible that I mentioned in my and then the Medicaid expansion comes in third and honestly of the overall opportunity.
We calculate Medicaid expansions about 10% of that so it's really the smaller piece of the overall opportunity DC some of those -- companies Amerigroup Molina Healthcare and send teen and close -- point to -- the premium for -- -- -- But certainly the Medicaid expansion and US Supreme Court ruling.
Dave went -- -- phrase in beautiful music city Nashville thank you so much appreciated thank you very much.
--
