Investors expect insurance enrollment through a key health care overhaul expansion to start slowly, and that could create a buying opportunity with some stocks, according to two Citi analysts who cover the health care industry.
Analysts Gary Taylor and Carl McDonald said in a Sunday research note that investors expect about 4 million people to sign up for 2014 coverage through insurance exchanges that begin accepting enrollment next month. That compares to a projection of 7 million made earlier this year by the Congressional Budget Office.
The health care overhaul aims to cover millions of uninsured people, and much of that coverage expansion will start next year, when income-based subsidies will help many people buy coverage on those exchanges. The state-and-federally funded Medicaid program that covers poor and disabled people also will expand in many states.
Taylor and McDonald expect the coverage expansion to benefit hospital operators like HCA Holdings Inc. and emergency-room staffing companies like Team Health Holdings Inc. the most, and they said they are optimistic that 2014 enrollment will exceed low expectations.
"Accordingly, we'd be aggressive buyers if initial enrollment is disappointing this (fall)," they said.
Conversely, the analysts expect the overhaul to have a limited impact on big health insurers.
Shares of HCA rose 2.4 percent, or 98 cents, to $41.27 Monday morning, while Team Health advanced 46 cents, or 1.3 percent, to $37.14. The Standard & Poor's 500 index also rose less than 1 percent.