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U.S. hospital stocks rise as insurance enrollment ticks up
March 18, 2014 / 7:21 PM / 4 years ago

U.S. hospital stocks rise as insurance enrollment ticks up

March 18 (Reuters) - Shares of U.S. hospital operators climbed on Tuesday after the Obama administration said 5 million Americans have signed up for health insurance through the new online marketplaces since open enrollment began on Oct. 1.

The figure represents an increase of 800,000 people since March 1, suggesting a late surge in public interest with less than two weeks left until the March 31 enrollment deadline, analysts said.

Shares of the largest U.S. hospital operator, HCA Holdings Inc, jumped 2.3 percent to $49.36 in late afternoon trading on the New York Stock Exchange. The stock of Community Health Systems Inc, the second-largest U.S. hospital operator, shot up 3.2 percent to $36.83, with shares of No. 3 Tenet Healthcare Corp up 2 percent at $40.83.

“The pace of enrollment in the final month appears to be accelerating, with call center volumes being the busiest they have been since December and over 5 million visits to throughout last week and weekend,” Credit Suisse analyst Ralph Giacobbe wrote in a note to clients.

Hospitals are expected to benefit from the increase in the number of Americans with health insurance through the private marketplaces and an expansion of the Medicaid program for the poor under President Barack Obama’s healthcare reform law. But uncertainty about whether enrollment would reach projections has created some volatility in hospital shares.

The Congressional Budget Office has predicted that total enrollment in exchange plans could approach 6 million by the sign-up deadline. The CBO scaled back its forecast from 7 million after technical problems marred the website’s launch.

Monday’s update did not say how many new enrollees were younger adults ages 18 to 34, a demographic considered crucial to the success of the insurance marketplaces because those consumers are expected to compensate for older, sicker policyholders who are more expensive to insure. Too few healthy beneficiaries could cause healthcare costs to rise.

The Obama administration said last week the level of young adult participation remained at 25 percent of total enrollment for the second month in a row.

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