Episode summary
The Only Health Insurance Stock You Can Own with Michael Ha | The Real Eisman Playbook Episode 51
The Real Eisman Playbook
· · 57 min · Hosts: Steve Eisman · Guests: Michael Ha
Summary
Michael Ha argues that the health insurance sector has moved from being a perceived safety trade to a structurally pressured group, with UnitedHealth, Molina and peers all facing different but related margin problems. For UnitedHealth, he says the key issue is Optum Health, where risk-adjustment changes under CMS have reduced the payoff from aggressive coding and exposed a deeper earnings hole than many investors expected.
He also says the company’s fourth quarter showed pressure across all three Optum businesses, while the 2027 Medicare Advantage rate notice was another negative surprise because pricing was flat and risk-adjustment updates were worse for chronic-condition codes. His view is that UnitedHealth’s vertically integrated structure has not produced the expected excess returns because the pieces are still too disconnected and too hard to manage.
On Molina, he is more constructive over the long run but still cautious near term, arguing that Medicaid redeterminations and the new work requirements in 2027 will keep membership and margins volatile before the market normalizes later. By contrast, he highlights Alignment Health as the best-run name in the space, citing low claim denials, strong growth, and a clinical model that keeps members out of the hospital.
Key takeaways
- Michael Ha says UnitedHealth’s Optum Health problem is real and is being amplified by CMS risk-model revisions that reduce reimbursement for aggressive coders.
- He says UnitedHealth’s fourth quarter showed pressure across Optum Health, Optum Rx and Optum Insight, while the 2027 Medicare Advantage notice was another negative surprise.
- Michael Ha thinks Molina will likely stay volatile through 2027 because Medicaid redeterminations and work requirements will keep pruning membership and worsening acuity.
- He argues Alignment Health stands out because it has grown revenue about 50%, expanded margins, and denies less than 2% of claims.
- Michael Ha says the sector is still worth investing in over the long term, but only selectively and with an eye toward integrity, coding intensity and care-model quality.
Notable quotes
“This industry has gone through wrenching changes in the last couple of years, all to the bad”
“The moment they acquired Dvita Medical Group the 5 years after their risk adjustment went from 1.0 to 1.51”
“I think structurally optim health might be they might be holding the biggest bag of toxic provider assets that are all aggressively risked”
“We got flat. Flat rates”
How the episode opens
Hey, it's Steve Eisman. So, today we have a returning guest, Michael Ha, who is the medical insurance analyst at Baird. Michael was here last year to talk mostly about United Healthcare and its problems.
And I think I I know I learned a tremendous amount from him. And from there we have had been on a bit of a journey in terms of the health industry, health insurance, medical insurance, pharmaceutical industry of the United States. In January we had a guest on Wars BARI who runs a company called Claimable and Wars is the place is is his company is the place you go where if you're denied by your health insurance company payment, he will appeal for you.
And what we learned from him was that the health insurance industry denies about 15 to 17% of all claims and that's one of the major reasons why they keep their profits up. And then recently we had Mark Cuban on who's running a company that's trying to reduce the costs of drugs in the United States and we talked a lot with him about pharmaceutical benefit managers PBMs. So today, um, Michael's back and we're going to talk about the whole sector.
You know, this is a a sector that is having wrenching problems, profitability problems, medical loss ratios going higher and higher, feels like the industry in some ways is almost completely out of control, has lost control of its business. And we're going to try and figure out what opportunities there are near-term and long-term. And afterwards, I'll be back to talk about some lessons learned.
Hi, this is Steve Eisman and welcome to another episode of The Real Eyesman Playbook. And today we have a returning guest, Michael Ha, who is the healthc care insurance analyst at Baird.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- health insurance industry
- unitedhealth earnings
- medicaid reimbursement
- drug prices
- medicare and medicaid pressures
Companies and tickers mentioned
- UNH
- MOH
- UnitedHealth
- Molina
- Alignment Health
- Medicare
- Medicaid
- Mark Cuban
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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