SPENCER JAKAB for the wall st journal writes: It is said that the only two certainties in life are death and taxes. A third might be that someone will try to make a buck off the first two.
After all, the Grim Reaper doesn't show up absent some illness or injury, while Uncle Sam requires lots of paperwork to assess his take. Both usually involve professional assistance. And the Affordable Care Act means the $2.8 trillion health-care and $19 billion tax-preparation industries just got much more complicated.
Having faced uncertainty, health insurers and hospitals looked like winners in the overhaul. But tax preparers such as H&R Block HRB -3.17% could be surprise beneficiaries of the law's heretofore messy implementation.
The law penalizes those who don't buy insurance while subsidizing about 80% of those enrolling on new exchanges. For insurers, this outweighed negatives such as strict control of medical-loss ratios that effectively cap profit along with the need to accept applicants without regard to risk.
From the bill's signing in March 2010 to last October's chaotic launch of enrollment, shares of Humana, HUM -0.20% UnitedHealth UNH -2.19% and Aetna AET -1.49%returned 108% on average—nearly double the increase in the S&P 500.
Hospitals could cheer, too, albeit with some concerns. They typically lose money on both uninsured patients and those covered by Medicaid but make up for it with privately insured patients. The new mix of insured patients was mildly positive for firms such as HCA Holdings HCA -2.79% and Tenet Healthcare. THC -2.52%
But the reality of the ACA may be less friendly to both industries. For one, those buying insurance on exchanges through the end of 2013 were sicklier than anticipated, with only 24% under age 35 versus expectations of 40%.
And there were only 2.1 million completed applications, compared with a projected 3.3 million and a goal of 7 million by March 31, when enrollment ends. Plus, late policy reversals allowed employers to delay offering private insurance in lieu of penalties and let owners of some non-qualifying individual plans keep their policies.
Those factors mean insurers likely charged too little initially. Meanwhile, hospitals may not see the higher profitability they expected.
But the bungled rollout and the law's complex individual tax implications could benefit H&R Block whether or not enrollment meets the administration's target. If nothing else, the law may expand America's top tax preparer's customer base, and help the company earn more from its existing ones.
H&R Block already has a pilot program to help people buy insurance. Starting next tax season, penalties for lacking coverage kick in. Even for those with coverage, H&R Block plans to offer guidance and use the refunds it typically applies to high-fee debit cards as a payment option. More people must now file returns and its role as middleman for insurers and insured could be lucrative.
One challenge is that health-care enrollment generally occurs in the fall while the tax season is in the spring. H&R Block employs just a fraction of its peak staff then. But it is confident that tools such as its "Helpth" website can process customers efficiently and steer new ones to its bread-and-butter tax prep.
Wall Street seems to agree. Since enrollment began, forecasts for H&R Block's 2015 earnings per share are up 10.6%. They fell by 2.9% on average for four big insurers and by 4.7% for four big hospital chains.
H&R Block's opportunity is hard to quantify but analysts have barely begun factoring in health-care-related revenue. So those revisions may not yet capture the true benefit. Meanwhile, industries anticipating the spoils of the ACA may see them flow elsewhere. So much for a sure thing.
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