Managed care stocks mixed as ACA credits, Trump health plan face uncertain fate

Managed care stocks have seen mixed results in the week since the House of Representatives passed a bill to extend Affordable Care Act credits and President Donald Trump announced a healthcare plan.

Although the legislation was passed by the House, Trump has indicated he may veto any extension of ACA tax credits. On Jan. 15, he also announced his own healthcare solution, dubbed the "Great Healthcare Plan." The plan does not directly address the ACA tax credits.

"The Great Healthcare Plan would execute the President's vision to send money directly to the American people, lower health insurance premiums, and cut kickbacks that raise insurance premiums," according to a release from the White House.

A pair of leading managed care insurers saw their stocks dip since the House passed its extension bill on Jan. 8, with UnitedHealth Group Inc. seeing the largest drop at 2.3% through the Jan. 15 close, followed by The Cigna Group, which ticked down 2.1%. Other large insurers logged modest increases, with Centene Corp. rising 0.7%, Elevance Health Inc. moving up 1.9% and Humana Inc. gaining 2.3%.

By comparison, the S&P 500 climbed 0.3% in that time frame while the S&P Insurance Index dropped 3.31%.

As the new year kicks off, ACA membership and the tax credits are a key theme impacting health insurance stocks, according to a research note from J.P. Morgan analysts.

"ACA exchange remain a swing factor for [managed care insurers] as there is a wide range of outcomes driven by likely [tax credits] expiration and related shifts in market morbidity," they said.

Bill's fate murky in Senate

COVID-era ACA enhancements, including broadened eligibility for tax credits, expired Dec. 31, and enrollees saw significant premium hikes when open enrollment for 2026 began in November. More than a dozen Republicans joined House Democrats to pass a three-year extension of those enhancements earlier this month.

The legislation now heads to the Senate, where prior unsuccessful efforts and comments from Trump suggest it is unlikely to pass.

Not every state is represented in the ACA marketplace to the same extent, and rate increases for each differ, although nearly half are facing rate increases exceeding 20%, according to an S&P Global Market Intelligence analysis of Centers for Medicare & Medicaid Services (CMS) data. Preliminary figures released Jan. 12 by CMS show about 22.8 million signups, which lags behind the approximately 23.6 million in the prior year, but is still better than feared, according to J.P. Morgan analysts.

ACA exchange signups might be down by single digits, the J.P. Morgan analysts said. While effectuated enrollment, which is when an enrolled member actually begins paying for premiums, remains unknown, a feared massive market decline appears less likely, they said.

"All that said, we think there are still factors to watch as we progress through the next few months, although this is somewhat better than initial expectations," the analysts wrote.

Centene remains the company with the largest exposure to the ACA exchange market, although Oscar Health Inc. also has a large exposure. Oscar's stock has risen 3.1% since Jan. 8.

Centene was the leading provider of individual health insurance plans in 2024, with nearly 4.2 million members enrolled, up 12.9% from the prior year, according to an analysis by S&P Global Market Intelligence.

Ahead of Congress' vote to end the shutdown, Centene CEO Sarah London, during an earnings call, said the company already repriced its marketplace plans for year-over-year margin improvement but still advocated for extending the tax credits.

"While our products are priced to support year-over-year margin improvement in the scenario where [the tax credits] expire, we believe these tax credits offer critical support for hard-working Americans, small business owners and rural healthcare infrastructure, and we are hopeful Congress can find a path forward," London said.