Health insurers, hospitals rise on lower policy-risk outlook
XLV•Health insurers Molina Healthcare and Centene rose 7.5% and 8.9%, while five hospital operators gained 8.8% to 10.4%, after brokerages said a Democratic congressional sweep could reduce policy risks for parts of the sector.
1. Shares climb
Molina Healthcare shares rose 7.5% to $223.36 and Centene gained 8.9% to $73.52. HCA Healthcare climbed 10.4% to $510.79, Universal Health Services rose 9.9% to $194.85 and Tenet Healthcare gained 8.8% to $290.35.
2. Policy outlook
TD Cowen said hospitals and Medicaid-focused insurers face less policy risk than most healthcare companies following the Democratic sweep of Congress. Cantor Fitzgerald said a larger-than-expected Democratic majority improves the odds of policies that could restore coverage for some people who lost it, which it said would benefit Centene and Molina.
3. Potential sector pressures
A brokerage expects affordability and industry accountability to dominate the healthcare agenda, creating high headline risk across much of the sector. Sweeping reforms remain unlikely with President Donald Trump in the White House, but Democrats could use debt-ceiling negotiations to push for restoring Obamacare subsidies and reversing Medicaid payment cuts. Citi expects greater scrutiny of drug pricing and federal health agencies, but sees limited near-term impact on drugmakers and expects existing pricing agreements with the Trump administration to remain intact.
