Donald Trump's re-election rippled through the health-care landscape as the new administration is expected to pull back on Biden-era measures affecting U.S. health insurers, drug prices and public-health leadership.
Insurers focused on the Medicare market jumped on the expectation that the government will pay higher rates to companies that provide private versions of the U.S. health program for seniors.
UnitedHealth Group Inc. shares rose as much as 6.6% when markets opened Wednesday in New York, while shares of Humana Inc. gained as much as 12%. CVS Health Corp. shares added as much as 14%, their biggest intraday gain in 24 years.
Companies that depend on Medicare for revenue have struggled in recent months under the Biden administration's stricter federal reimbursement rules, which followed allegations that the industry exaggerates patient illnesses to boost revenue.
Trump is considered more friendly to the industry, and the Project 2025 policy blueprint written by his advisors calls for default enrollment into private Medicare plans. Trump sought to distance himself from the document.
Rising costs of patient care and tighter federal reimbursements have dragged on the earnings of companies that sell private Medicare Advantage plans.
CVS cut its 2024 forecast three times this year before finally pulling it entirely in October, citing medical costs in the Aetna insurance unit.
Industry Deals
Trump is also seen as less likely than the Biden administration to oppose health-industry deals. Bloomberg News has reported that Cigna Group revived informal merger talks with Humana after discussions fell apart last year.
However, Cigna Chief Executive Officer David Cordani appeared to throw cold water on that prospect last week when he noted problems in the Medicare market that have led to share declines at Humana, and said his company would use excess cash to buy back its own stock.
UnitedHealth has been pushing for U.S. officials to give its blessing to a $3.3 billion planned purchase of Amedisys Inc., a provider of home health services. The Justice Department's antitrust division has been investigating the deal for more than a year.
"There is no doubt this administration – at least on paper – will be far more amicable when it comes to business combinations," Mizuho's Jared Holz wrote in a note.
Meanwhile, shares of insurers that sell private versions of Medicaid, the joint state-federal program for low-income people, fell on the expectation that the next administration will pull back on funding.
Centene Corp. fell as much as 7.5%, and Molina Healthcare Inc. slid as much as 7.9%.
Both companies also sell Affordable Care Act plans supported by expanded federal subsidies that Republicans opposed.
Republican House Speaker Mike Johnson promised "massive reform" to the law if the GOP took control of government, though a previous effort to repeal it under Trump failed.
