Trump's Win Leaves Health Insurers With Questions -- Update

By Melanie Evans and Anna Wilde Mathews

Hospital and insurance companies that have benefited from the Affordable Care Act's expansion of Medicaid coverage saw a sharp fall in their stock prices on fears a Trump Administration could roll back that expansion.

President-elect Donald Trump has pledged to "repeal and replace" the Affordable Care Act, which extended publicly subsidized health insurance to millions through the expansion of Medicaid and through state exchanges for private insurance.

Hospitals and some insurers benefited from an influx of newly insured patients under the law. Hospitals saw patient volume growth and fewer unpaid bills.

Shares of HCA Holdings Inc., the nation's largest hospital company, were down 14% Wednesday morning from the prior day's close. Tenet Healthcare Corp. was down 23%. Troubled hospital operator Community Health Systems Inc. was down more than 23%. Universal Health Services Inc., which operates acute-care and behavioral health hospitals, was down about 8%.

Molina Healthcare Inc., a large insurer of Medicaid patients, saw shares drop about 11% Wednesday morning.

Some analysts downgraded HCA Holdings, on the risk that Medicaid expansion would be reversed and uncertainty about what an alternative may be. "We have no idea what will replace it," said Sheryl Skolnick, an analyst with Mizuho Securities USA, who downgraded the company to neutral from buy. RBC Capital Markets analyst Frank Morgan wrote on Wednesday it is "not clear at all" how the incoming president would replace a law that extended insurance to millions.

In a statement, HCA said the company has "a long history of working with America's leaders in Washington and across the nation to ensure access to quality healthcare for as many people as possible, and we will continue to do that."

Many analysts think it is unlikely all of the ACA's effects would be truly undone, but believe the lack of clarity will likely pressure the industry. "A Trump victory just increases uncertainty, which the market doesn't like," said Thomas Carroll, an analyst with Stifel Financial Corp.

The near-term "impact and shock of the result will weigh on stocks across our coverage until we get greater clarity on agenda and details" around Mr. Trump's health-care policies, wrote Ralph Giacobbe, a Citi analyst. Writes analyst Ana Gupte of Leerink, "The unthinkable has happened."

Though Mr. Trump has committed to repeal the health law, he has been vague about how he would do so and what would replace it. Like other Republicans, he has endorsed policy ideas including selling health plans across state lines and increasing use of health-savings accounts.

In a statement, the American Hospital Association said the hospitals that make up its membership are "a trusted source of information for legislators on the complex issues related to health care." It said the trade group looks forward to working with the Trump Administration and Congress.

In a statement, America's Health Insurance Plans, the main lobbying group for the industry, said it would "work across the aisle -- with every policy maker and the new administration -- to find solutions that deliver affordable coverage and high-quality care for everyone."

The insurance industry's experience with the ACA has been a mixed bag, with upsides and downsides. If Mr. Trump somehow did away with the law's expansion of Medicaid, insurers could lose new enrollees they have gained and the prospect of further growth in that business from states that hadn't yet expanded their programs.

Write to Melanie Evans at Melanie.Evans@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

November 09, 2016 12:32 ET (17:32 GMT)

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