As more Americans appear to be rushing to sign up for Obamacare plans before the March 31 deadline, investors have become bullish on health insurers.
Shares of UnitedHealth Group, Humana, Aetna and WellPoint rallied Wednesday—with all four recording all-time highs in the wake of the Obama administration announcement that total enrollment in Affordable Care Act health exchange plans now tops 5 million. The move sent the S&P 500 managed care sector to a historic high on Wednesday. On Thursday, the sector continued its upward march.
"My sense is that people are feeling marginally better about the ACA enrollment," said Chris Rigg, health care analyst with Susquehanna Financial Group. "The more people that enroll, the better off everybody is."
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WellPoint, which has the largest exposure to state exchanges, is estimated to have enrolled more than 1 million people—about 20 percent of the new ACA subscribers, according to analysts at Leerink. They estimate Humana's exchange enrollment has reached 335,000, while Health Net has added 200,000.
Hisham Uadadeh enrolls in a health insurance plan under the Affordable Care Act on Feb. 13, 2014, in Miami.Getty Images
Beyond Obamacare enrollment, analysts say the outlook for Medicare Advantage reimbursements has also provided momentum for insurers like Humana, which is now up 13 percent for the year and picked up strength after the Centers for Medicare and Medicaid (CMS) proposed more benign rates cuts than anticipated.
"People came in with very low expectations on the Medicare side and that's been a big driver," Rigg said.
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Analysts said the latest CMS data show that despite reimbursement cuts to the program a year ago, enrollment in Medicare plans is growing faster than in 2013. Medicare has seen 835,000 new enrollees this year, up 5.5 percent from the first quarter of last year.