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Health Net Inks Govt. Deals

Zacks Equity Research

Health Net Inc. (HNT) is set to capitalize on the ongoing U.S. Health Care reforms. For this, the company that is a veteran in the field of Medicare and Medicaid services is collaborating with federal government agencies like Centers for Medicare and Medicaid Services (CMS) and the California Department of Health Care Services (:DHCS).

Health Net’s wholly owned subsidiary, Health Net Community Solutions, Inc. has inked deals with the aforementioned agencies. The objective is to create awareness and improve health outcomes among the dual-eligibles in Los Angeles and San Diego through a dual-eligible demonstration.

The duals demonstration program arranged in the regions is part of Cal MediConnect – California’s Coordinated Care Initiative. Through this deal, Health Net will cater to individuals who satisfy the eligibility criteria for both the Medicare (Americans aged 65 years and older and the disabled) and California’s Medicaid program – Medi-Cal (those with family income up to 133% of the federal poverty level, as per the Patient Protection and Affordable Care Act). The company intends to offer managed care services to individuals in the Los Angeles and San Diego counties by Apr 1, 2014.

Around 1–2 million new individuals are expected to become eligible for the Medi-Cal program under ObamaCare. Medi-Cal is being administered by CMS and DHCS. Thus the aforementioned contracts with the agencies should benefit Health Net by expanding its clientele.

Health Net’s strong operating performance helps it to invest in the Medicaid and Medicare expansion under the Affordable Care Act (:ACA). The participation in California’s Coordinated Care Initiative also reflects the company’s investment capacities.

However, customer attrition over the past few years has jolted the company to some extent. The aforementioned deal is expected to help the company recover on this front.

Presently, Health Net carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the insurance space include CNO Financial Group, Inc. (CNO), Kemper Corporation (KMPR) and American International Group, Inc. (AIG). All three stocks carry a Zacks Rank #1 (Strong Buy).

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