Three Things Investors Need to Know About Healthcare Reform (CI, UNH, WLP)

Healthcare reform is now law.

Over the next decade the government will reach further into the private sector than it ever has before.

Despite the year of debate and non-stop selling of the program, there’s still a lot of uncertainty over the impact of the law.

All politics aside, we know a few things already.

First, it will not be nearly as good as proponents said it will be.

Second, it will not be as bad as opponents said it will be.

Third, over the long-run though, we know it will cost far more than projected. The expected tax revenues and savings will not materialize and spending will be greater than forecast.

Finally, as with all other government interventions, it will create opportunities and pitfalls for investors.

As a result, we see lots of opinions based on the “buy healthcare stocks” rationale.

It’s a very popular thesis. Health insurers are some of the best-performing stocks in the market. Shares of Cigna (NYSE: CI), UnitedHealth Group (NYSE: UNH), and WellPoint (NYSE: WLP) are up an average of 120% since the healthcare debate began a year ago.

We, however, expect the thesis will go down as all the other over-simplified and seriously flawed theses that have pervaded the markets over the years. It’ll turn out as well as the “buy infrastructure stocks” after the stimulus bill.

That’s why at the Prosperity Dispatch, we’ve been putting together a more in-depth approach.

As a result, we see a few opportunities and many more dangers due to healthcare reform.

Here’s what we see as the best of the bunch and the more popular ones that are just plain wrong.

To read the rest, check out this story at Stockhouse