Increasing Medicare Advantage membership and a more tranquil political atmosphere could bolster the health insurance industry's bottom line throughout 2020.

A majority of the largest managed care companies are expected to report year-over-year improvements in revenues and earnings when they release financial results for the fourth quarter of 2019. An S&P Global Market Intelligence examination of sell-side analyst forecasts shows that revenues and EPS are projected to be higher at eight of the top 10 public U.S. managed care insurers.

Molina Healthcare Inc. is the lone company in the sector that is projected to see both earnings and revenues decline compared to the fourth quarter of 2018. Magellan Health Inc. is expected to fall short in terms of revenue, while Humana Inc. is not expected to exceed its EPS from a year ago.

Among the topics of conversation that CFRA analyst Colin Scarola expects to hear on earnings calls is Congress' repeal of the Affordable Care Act's health insurance tax. In an email, the analyst said there should be talk about savings generated by carriers transitioning sites of care from hospital settings to outpatient facilities. Medicare Advantage growth strategies, which he called "the fastest growing and most competitive membership segment for many MCOs," are also likely to take center stage.

Cantor Fitzgerald analyst Steven Halper anticipates Humana and UnitedHealth Group Inc. will have good quarters in terms of Medicare enrollment. UnitedHealth remains a clear leader in the segment, Halper said. While Anthem Inc., Humana and Centene Corp. are playing catch-up on that front, they are executing well in trying to narrow the gap.

"A lot of these companies continue to invest in different technologies and provider assets in order to improve the performance of their health plans," Halper said in an interview. "I think that's an ongoing thing."

Jefferies analyst David Windley described the first three quarters of 2019 as "tumultuous" for health insurers due to, among other things, fears of a single-payer system gaining political traction and concerns over the ACA. But after UnitedHealth reported its third-quarter 2019 earnings, he said the sector outperformed the market by more than 20 points since then.

Halper said the change in the political landscape also should be a boon for the sector for 2020 as talk of "Medicare for All" from Democratic presidential candidates has all but disappeared from the campaign trail and former Vice President Joe Biden remains the frontrunner for the Democratic nomination.

"Investors finally began to understand that Medicare for All is not possible, ever, in the United States," Halper said. "And if [Biden] is elected, he'll support the ACA and look to improve it, and not rip it to shreds and turn the healthcare system upside down."

Another factor in the sector's stock performances will be the outcome of the litigation involving the ACA. An appellate court in mid-December 2019 ruled that the ACA's individual mandate was unconstitutional. That decision, however, did not invalidate the law, but instead sent the case back down to a lower court to determine whether other parts of the law could work without the mandate.

Halper said any ruling that guts the law would be viewed negatively in the health insurance sector, primarily because of the expansion of Medicaid programs in many states.