BCBS-NC Files For Rate Increases

Deutsche Bank has issued an industry alert report on the Managed Care sector rate filings published by Blue Cross Blue Shield of North Carolina (BCBS-NC). This report was submitted by BCBS-NC to the NC Department of Insurance for plan effective January 1, 2011, when some of the initial health care reforms go into effect. BCBS-NC has filed for rate increases that will affect 300,000 individuals in North Carolina, 70% of which will see increases below 10% including 28,000 who will see decreases. The Blue Advantage plan will increase by 6.97% and the Blue Option HSA plan by only 2.06%, rates at their lowest since 2007. Premiums are likely to increase in 2014 when health care reform eliminates underwriting. Focus stocks include: Aetna

Buy, $35 price target, $27.15 AmeriGroup

Buy, $43 price target, $38.14 CIGNA

Hold, $40 price target, $32.72 Centene

Hold, $24 price target, $20.72 Coventry Health Care

Hold, $23 price target, $20.01 eHealth

Hold, $13 price target, $9.85 Health Net

Hold, $26 price target, $23.29 HealthSpring

Hold, $20 price target, $18.27 Humana

Hold, $48 price target, $48.50 Healthways, Inc.

Hold, $15 price target, $13.04 Magellan Health

Buy, $49 price target, $43.32 Molina

Hold, $25 price target, $26.07 Universal American

Hold, $16 price target, $13.91 UnitedHealth Group

Hold, $36 price target, $31.50 WellCare Health Plans

Hold, $25 price target, $25.12 WellPoint

Buy, $68 price target, $49.64