The Affordable Care Act has long been under fire. But now, with the election of Donald Trump as president and a significant Republican majority in Congress, Obamacare seems all but doomed.
Conservative lawmakers were unable to defund or repeal the healthcare law with Obama himself in the White House. But now, with no risk of veto and power in both the House of Representatives and Senate, Republicans are sure to act.
Healthcare stocks dependent on the law have suffered significant declines since Election Day as a result. Some of the biggest losers include:
- HCA Holdings Inc (NYSE:HCA), which manages hospitals and surgery centers, is down 11% since Nov. 8 as of this writing.
- Molina Healthcare, Inc. (NYSE:MOH), which helps agencies administer Medicaid, is down -15%.
- Centene Corp (NYSE:CNC), which provides services to goverment-sponsored healthcare programs, is off 22%.
Of course, on the flip side are large health insurers such as Aetna Inc (NYSE:AET), UnitedHealth Group Inc (NYSE:UNH) and Humana Inc (NYSE:HUM), all of which recently announced significant cutbacks in participation with Obamacare exchanges. Each of these names is up by between 6% and 12% since Election Day.
The logic is simple: For operators like HCA, there will be increased use of their facilities by uninsured patients — and thus, more doctor bills that go unpaid — and as those now covered by Obamacare find no good options going forward. Similarly, firms that help the government administer insurance coverage and services will simply have less business as policies dry up.
At the same time, big insurers like AET, UNH and HUM will go back to the old way of doing things where at-risk patients are denied coverage or charged big fees to offset risk. This is not good for the patients, but it’s much better for the insurers’ bottom lines.
With Trump elected and Republicans about to take control of Congress, the market is already moving in anticipation of the death of Obamacare.
But if and when the legislators finally act, these big moves could only be the beginning.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
