President-elect Donald Trump has made his intention clear to repeal and replace the Affordable Care Act when he takes office. The problem for Jim Cramer is that no one knows what he will replace it with.
"We are looking at a very confused environment for the health care sector, especially the health maintenance organizations that are so heavily impacted by the law," the "Mad Money" host said.
It could be impossible to predict what could happen to health care providers like UnitedHealth, Aetna, Cigna and Humana, along with the millions of people who will lose insurance coverage and their subsidies if Obamacare is repealed.
The only winner of the group worth owning is UnitedHealth, Cramer said, even as it has run 14 percent since the election. UnitedHealth has already removed itself from the health care exchanges. Other competitors are still participating and even profiting from the exchanges, which makes them more vulnerable of the repeal actually occurs.
Cramer also suspects that when the Trump administration goes to replace Obamacare, it could turn to UnitedHealth given that it has been a very vocal critic of the program.
The Affordable Care Act was enacted by President Barack Obama in 2010 as a mandatory requirement for health insurance and a fine for those that don't have coverage. It also prohibits insurance companies from denying coverage or charging higher premiums to those with pre-existing conditions.
However, over time it became clear that new enrollees tended to be older, and not enough young and healthy people were signing up. Thus, it was filled with sicker and higher-cost customers, which is why many companies have either pulled out of the exchanges or raised premiums.
Trump has shed light on his plans by stating that he is in favor of allowing insurance companies to sell plans across state lines, making healthcare premiums fully taxable, block granting Medicaid money to states and put more emphasis on health savings accounts.
"Repealing the Affordable Care Act would probably be a wash for most of the industry," Cramer said.
On one side of the coin it could cause fewer people to buy insurance coverage, and on the other side it could mean healthcare companies can make more money off of the patients they do have since they won't be required to insure people who are already sick.
Ultimately, Cramer says UnitedHealth is a best-of-breed play. It is America's largest provider of health insurance and has a major division, called Optum, which provides software, consulting and business practice outsourcing and acts as a pharmacy benefit manager.
"UNH reports next Tuesday, so you might want to scale into this one slowly, just in case the market doesn't like what management has to say," Cramer said.
So, while Cramer doesn't know what will happen to the health care industry once Trump becomes President, he does know he has been clear about his intention to repeal Obamacare. In that kind of environment, UnitedHealth was the clear winner.