Health-Care Bill Version 2.0 Is Win-Win For Health Insurers (HUM, AET, CI, UNH)

Earlier this week, in an attempt to bridge differences between House, Senate, and Republican health-care reform proposals, Pres. Obama released a proposed health-care bill drafted by his administration.

The bill, largely a mixture of concepts proposed by Democrats in the Senate and House with a few Republican-inspired additions thrown in, has drawn fire from both sides of the aisle. Republicans like House Minority Leader John Boehner (R-Ohio) claim that the bill "doubles down" on problems with the original bills that will drive up costs, while some Democrats heavily criticize the bill for excluding a public option.

There is one group, though, that is looking at the situation as a win-win: the health insurance company.

Even though a few Senate Democrats are renewing a campaign for a public option, that path has effectively been caved in by a hostile and vociferous Republican attack. This was the health insurance industry's biggest fear, and now that it is, for all intents and purposes, dead and buried, the insurance industry is set to benefit regardless of which bill makes it to the floor.

Obama's bill calls for federal government assistance to help people purchase health insurance from private insurers. While this could cut costs for individual citizens, it will increase costs for the federal government - and essentially funnel money to the health insurance industry. Even though the plan also calls for a limit on how high insurance companies can increase premiums, it has not been forbidden from doing so - and an analysis of the current administration is indicative that the standards for premium hikes will be more on the lenient side.

The only major provision of this health-care proposal is the fact that insurers must accept those with pre-existing conditions. But, essentially the federal government will be paying for this measure, since many of those with costly pre-existing conditions will not be able to afford insurance without government existence.

It is unlikely that a bill will pass without some strong, insurance industry-friendly, Republican-supported measures in place, unless Democrats elect to pursue reconciliation. Such an option would be foolhardy, though, without a public option in play, since it will essentially be the same as dropping a nuclear bomb to capture a city instead of forcing a total surrender.

If I were looking to place an investment based on the health-care bill, I would get a piece of the major health-care insurers out there, such as Humana (NYSE: HUM), Aetna (NYSE: AET), Cigna (NYSE: CI), and UnitedHealth (NYSE: UNH).