June 5, 2015 by Tony Novak
Despite all the hype about the potential of private health insurance exchanges, the stock market has not been kind to firms in this field. This chart shows the last 18 months stock performance of the industry’s largest firm Ehealth. The price peaked at $61.66 early in 2014 and it has been all disappointment since then. The stock bumped up recently to $12.54 on news of a new line of self-branded insurance products. Even so, this is still a disaster for investors.
My guess is that this company is penalized by the market simply because it is so heavily invested in traditional health insurance. Perhaps newer firms with more resources focused on alternative or supplemental products would perform more favorably. Over a longer term firms with excellent technical capability should be able to capitalize on the weaknesses created by the ACA. But since this post-ACA industry evolution is still in its infancy, we’ll just have to wait and see.