Health insurer and hospital stocks climbed Nov. 4 after Democrats won majorities in both chambers of Congress in the Nov. 3 midterm elections, as analysts said the new Congress could delay Medicaid cuts and restore enhanced ACA subsidies.
Here is how healthcare stocks moved and what analysts said comes next.
1. Medicaid and exchange insurers lead the payer rally
Insurers most exposed to Medicaid and the ACA marketplaces posted the biggest gains. Centene’s shares closed up 12.6%, Long Beach, Calif.-based Molina Healthcare gained 8.9% and Elevance Health rose 4.9%, according to Yahoo Finance market data.
UnitedHealth Group and Cigna, which are less exposed to Medicaid and the exchanges, saw smaller moves. Cigna rose 3.4% and UnitedHealth Group gained 1.2%.
Bernstein analyst Lance Wilkes named Centene, Molina and Elevance as the most direct beneficiaries of the election and UnitedHealth to a lesser extent, according to Investing.com. Bernstein expects negotiated delays to parts of HR 1 and compromise legislation to restore enhanced marketplace subsidies. It does not expect cuts to Medicare Advantage.
“With this outcome, we expect Democrats will need to pass and have signed new legislation to show their capacity to govern,” Mr. Wilkes wrote in a client note.
2. Hospital operators climb 9% to 16%
Franklin, Tenn.-based Community Health Systems led the group, closing up 16.1%. King of Prussia, Pa.-based Universal Health Services rose 10.9%, Nashville, Tenn.-based HCA Healthcare gained 10.3%, Dallas-based Tenet Healthcare climbed 9.6% and Acadia Healthcare rose 8.9%, according to Yahoo Finance.
Bernstein tied the move to Medicaid enrollment and state-directed payments. The firm expects delays to HR 1 provisions and ultimately no reductions to state-directed payments, though it does not expect growth in those programs to resume, according to Investing.com.
“For hospitals, we see improvements in enrollment outlook as being the primary benefit,” Mr. Wilkes said.
3. Drugmakers edge up as analysts downplay pricing risk
Large drugmakers posted modest gains Nov. 4 as analysts said a Democratic Congress is unlikely to quickly change drug pricing policy. Johnson & Johnson closed up 3.8%, AbbVie 3.1%, Pfizer 2.6% and Eli Lilly 0.6%, according to Yahoo Finance.
Citi analysts said existing most-favored-nation pricing agreements “will likely remain intact,” but that Democratic committee control “likely brings visible hearings and inquiries around drug pricing, industry practices and implementation,” Clinical Trials Arena reported.
Novo Nordisk shares closed up 5%. The company raised its 2026 outlook the same day, and CEO Mike Doustdar told CNBC he does not expect the election to upend the business, according to Yahoo Finance.
“We will work with both Republicans, as well as Democrats, on that agenda. So, I don’t foresee that our world will change dramatically,” Mr. Doustdar said.
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