Health Care Stocks Skyrocket In Response To A Likely GOP Senate

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Andrew Trunsky Political Reporter
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Health care stocks soared Wednesday after Republicans seemed likely to hold their Senate majority in a potentially divided government, preliminary election results showed.

With a GOP Senate, many sought after policy goals from either party, ranging from drug price legislation to Medicare-for-All, are highly unlikely to come to fruition, and instead will ensure what has become a profitable status quo, Axios reported.

While some companies saw shares rise approximately 6%, others, like Cigna and Anthem, rose over 15%, according to Axios.

The health care stock bump mirrors a similar surge in 2018 when Democrats took the House of Representatives, according to the outlet.

In a note to investors Wednesday, Spencer Perlman, an analyst at the health care policy firm Veda Partners, wrote that the likely election results means that “the public option and direct government negotiation on drug prices are dead for at least the next two years.

Perhaps more important is that divided government all but guarantees the short-term preservation of employer health coverage, which has been extraordinary profitable for health care companies.

Though the initial results have been promising for the industry, it faces another possible hurdle next week. The Supreme Court is set to hear a case Tuesday that Democrats say could potentially invalidate the Affordable Care Act, which could cause significant disruption for companies that have spent the last decade structuring their policies around the law. (RELATED: The ACA Is Likely Here To Stay, Experts Say)

If the ACA is overturned, the number of uninsured Americans would skyrocket, potentially leading to more uncompensated care from hospitals as a result, according to Axios.

Though Republicans are likely to hold Congress’s upper chamber, Democrats’ hopes are not completely destroyed. Four senate races have yet to be called, and if Democrats win three then they would have a 51-seat majority, though forecasters indicate that is unlikely.

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