Healthcare stocks feel the pain

The longest government shutdown in history just claimed an unlikely victim: healthcare stocks.

A deal between Republicans and a group of eight Democrats that would end the political gridlock advanced in the Senate today. That’s great news, but there’s a catch: The deal doesn’t extend the Affordable Care Act health-insurance subsidies that have become a focal point of the shutdown negotiations. Instead, Republicans agreed to put those tax credits up for a vote at a later date.

The battle over healthcare subsidies has captured the attention of Democratic politicians for good reason: If they expire, millions of ACA enrollees will see their health insurance premiums skyrocket, and it could lead to more than five million uninsured Americans by 2034, according to the Congressional Budget Office.

With an extension of ACA subsidies off the table, the fear now is that higher premiums means more enrollees will drop out of health insurance marketplaces altogether—and those who enroll will likely have to do so because they are sicker than average patients, meaning it will cost companies more to care for them.

The combination tanked managed care companies: Centene Corp plunged 8.84%, and Molina Healthcare dropped 7.34%.

Health insurers also felt the pain: United HealthGroup dipped 0.80%, Oscar Health plummeted 17.55%, Cigna lost 2.56%, and Humana fell 5.64%.

And hospital stocks got caught up in the political drama: Tenet Healthcare Corp dropped 5.23%, HCA Healthcare lost 3.63%, and Universal Health Services declined 2.79%.

Everybody hates health insurance

While Democrats have long railed against the high cost of healthcare, President Trump joined the chorus of people taking aim at health insurance companies over the weekend, making investors even less optimistic that these stocks will come out of this political war unscathed.

"In other words, take from the BIG, BAD Insurance Companies, give it to the people, and terminate, per Dollar spent, the worst Healthcare anywhere in the World, ObamaCare,” Trump wrote on Truth Social Saturday.

Comments like that could make a rough year for health insurers even worse: The S&P 500 Managed Health Care Index has sunk 33% this year so far.

The fight isn’t over quite yet: While the government took a big step toward reopening, it’s by no means a done deal. The package must be passed by the Senate and then the House, before being signed by Trump. There’s a good chance that the government may remain partially shut down for days to come, if not weeks.

So for now at least, many healthcare stocks will have to remain in limbo.—LB