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."
(Read more: Health-care IT firm Castlight soars 139% after IPO)
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.
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.
(Read more: Employer health plan in 2025? Don't count on it)
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.
Citi analyst Carl McDonald said he expects that will make it hard for the industry to argue that the latest proposed rate cuts will impact enrollment.
"As the industry lobbies for more favorable 2015 Medicare rates," he wrote in a note to clients, "one obstacle is the fact that the upheaval predicted by the industry a year ago after a 4 to 5 percent rate cut in 2014 really hasn't materialized."
Year to date, the S&P 500 insurance subsector is up 5.4 percent. That's slightly less than the overall performance of the health-care sector in the index, which is nearly 7 percent higher, driven by big gains in biotech stocks.
(Read more: Another Obamacare test: Keeping co-ops afloat)
Can the momentum for insurance continue into the second quarter? Rigg thinks it can. One thing he'll be watching when the major carriers report their first quarter earnings is for any signs of changes in medical costs.
"As long as there's major change in recent trends, the stocks should continue to work," he said.
—By CNBC's Bertha Coombs. Follow her on Twitter @berthacoombs.