Dear Mr. Berko:

I’ve worked for the government for 23 years. The government does all my retirement stocks and bonds, and it also gives me a good pension and pays for all my health insurance, which is lucky for me. Last week, my brother told me that he worries about the $16,000 a year he pays for health insurance for himself, his wife and his three kids and about his retirement plan, which isn’t doing well. He works in the private sector. I had to lend him $3,200 to help him with his health plan. When I told my neighbor, who is at Humana, she said some rates could triple next year. Fortunately, my brother and his wife have part-time jobs that pay in cash, or they would never make it. I have never been in stocks and think health insurance stocks would be a good place to put money. I have $4,300 to invest. What insurance stock do you think would make me the most money?

-- H.G., Kankakee, Ill.




Dear H.G.:

You are, indeed, very lucky. The state of Illinois, sometimes misnamed the Land of Lincoln, is officially the most dishonest state government in the country. Last March, the Securities and Exchange Commission filed civil fraud charges (SEC v. Illinois), and now there’s talk among some of the legislators about bankruptcy. If you have a chance to read the charges, it might encourage you to vote against gun control. I remember hearing Claude Kirk, the flamboyant ex-governor of Florida, saying something like, “Show me a state where its legislators have not become wealthy, and I will show you a state that is well-run for its citizens.” I think there are lots of very wealthy legislators in Illinois. I know there are in Florida.

WellPoint Inc. (WLP-$77.91) and UnitedHealth Group Inc. (UNH-$61.38) are two health insurers that could benefit enormously in 2014 and beyond as rates explode. Several folks I know in the business tell me that next year’s health insurance rates could increase by between 50 and 300 percent and that rates for 2015 and 2016 may increase by between 20 and 40 percent. And health insurers are privately warning brokers that rates will rise significantly because of the “Affordable” Care Act. This is at odds with the Obama administration, which insists the law “makes health care more affordable” and “gives you better access to care.”

How sad; we can’t trust Congress, and we can’t trust the administration. Please remember the above quote next year when rates go nuclear. And it won’t be long until only the wealthy can afford to remain healthy.

WLP is a $72 billion-revenue insurer, fighting clumps of class-action suits, racketeering suits, civil suits and complaints, which so far have cost the company hundreds of millions of dollars. I wouldn’t trust this company to insure a wombat. But lots of policyholders sue WLP, and lots of attorneys make a good living because management’s insatiable appetite for profits exceeds its concerns for policyholders. WLP is expected to earn $7.45 a share ($1.4 billion) this year on $72 billion in revenues, and per-share profits for the following years are expected to be enormously impressive. There should be attractive share appreciation in WLP.

UNH is a slightly larger company, with 2013 revenues of $124 billion, and is expected to earn $5.50 a share ($5.5 billion) this year. And next year, those numbers will be considerably higher. Did you know that Steve Hemsley, UNH’s CEO, earned $35 million last year, thanks to generous policyholders? It’s estimated that the top 10 health insurers (private and public) will net $78 billion this year. And you could double that if insurers didn’t have to pay salaries to hundreds of thousands of employees or pay for the rent, utilities, office supplies, bookkeeping, legal, accounting, travel, advertising, phones, computers, pension contributions, entertainment and contributions to members of Congress – from your premium dollars.

In the next four years, I think WLP and UNH could trade at $165 and $140, respectively. These companies are cash cows and, like the international arms business, have zero exposure to loss. Invest here and you will be pleased as a pasha.