Bulletin
Investor Alert

New York Markets Open in:

Oct. 16, 2017, 8:23 a.m. EDT

Trump announcing end to cost-sharing payments slams insurers, hospitals

Trump has previously threatened to end Obamacare payments, and the announcement has a tone of finality this time

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Centene Corp. (CNC)
  • X
    Molina Healthcare Inc. (MOH)
  • X
    Anthem Inc. (ANTM)

or Cancel Already have a watchlist? Log In

By Emma Court


Getty Images
People protest Trump administration policies that threaten the Affordable Care Act, Medicare and Medicaid in January.

The Trump administration’s announcement that it will stop paying cost-sharing reduction payments to health insurers, a major part of the Affordable Care Act, sent shares of health insurers and hospitals plummeting Friday.

As is his style, the president made the announcement in a tweet:

In brief remarks to reporters at the White House Friday, Trump said insurers have made a fortune and that CSR payments go to them “to lift up their stock price.” He added, “That’s not what I’m about.”

Health insurers that still have a presence on the ACA exchanges were the hardest hit in Friday trade. Those insurers are expected “to have immediate losses, some of potentially large magnitude, and a rapid exit of plans from marketplaces,” said Mizuho analyst Sheryl Skolnick.

In addition, “hospitals should see rising bad debt in 2018 as these co-pays/deductibles go unfunded, in our view... we would expect rising numbers of no pay heads in hospital beds,” she said.

Centene Corp. /zigman2/quotes/208900023/composite CNC +0.87%  shares, which has turned a significant ACA profit and planned to expand its presence, dropped as much as 8.8% Friday morning, evening out to a 3% decline in the afternoon. Molina Healthcare Inc. /zigman2/quotes/205492029/composite MOH -1.55%  , which has also reported ACA profits, declined 3.4% in afternoon trade. Stock in Anthem Inc. /zigman2/quotes/203808743/composite ANTM -0.24%  , one of the few large health insurers that hasn’t exited the exchanges, dropped 2.6%.

Read: What Trump could do to make Obamacare ‘implode’

Other health insurer shares were also down in Friday trade, even those who have exited ACA exchanges or, like WellCare Health Plans Inc. /zigman2/quotes/207459018/composite WCG +1.35%  , which never participated and yet had a stock decline of as much as 2.5%. UnitedHealth Group Inc. /zigman2/quotes/210453738/composite UNH -0.50%  stock declined 0.5%, Aetna Inc.  stock dropped 1.1% and Humana Inc. /zigman2/quotes/203095337/composite HUM -0.39%  shares declined 1.8%.

Shares of hospital companies, which benefited from the ACA’s expansion of health insurance coverage, declined sharply on Friday. Tenet Healthcare Corp. /zigman2/quotes/207964487/composite THC +3.01%  stock dropped 4.8%, Community Health Systems Inc. /zigman2/quotes/203657360/composite CYH -3.25%  shares dropped 3.7%, HCA Healthcare Inc. /zigman2/quotes/205934574/composite HCA -0.63%  stock declined 0.5%, Universal Health Services Inc. /zigman2/quotes/208539347/composite UHS +0.44%  shares declined 0.5%, Quorum Health Corp.  shares dropped 5.9% and LifePoint Health Inc.  shares declined 0.1%.

See more: CBO: Trump threat to scrap cost-sharing payments would increase federal deficits, premiums

President Donald Trump also signed an executive order expected to undermine the ACA and benefit companies offering short-term health policies on Thursday. Those companies include Health Insurance Innovations Inc.  , which had a 3% share rise on Friday, and UnitedHealth Group.

Trump has previously threatened to end CSR payments, which are made to health insurers to pay for the increased cost of certain ACA plans and amount to billions of dollars. Although the announcement has a tone of finality this time, there are reports that the president could continue the payments if a bipartisan deal is reached.

In August, a report from the non-partisan Congressional Budget Office found that ending CSR payments would increase federal deficits and gross premiums for certain ACA plans, and would translate to no ACA plans available to about 5% of people next year.

Health Care Select Sector SPDR /zigman2/quotes/205918244/composite XLV -0.33%  shares declined 0.2% in Friday trade. Shares have risen 3.6% over the last three months, compared with a 4.4% rise in the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.84%  .

/zigman2/quotes/208900023/composite
US : U.S.: NYSE
$ 60.42
+0.52 +0.87%
Volume: 3.60M
Sept. 17, 2020 4:03p
P/E Ratio
21.12
Dividend Yield
N/A
Market Cap
$34.71 billion
Rev. per Employee
$1.27M
loading...
/zigman2/quotes/205492029/composite
US : U.S.: NYSE
$ 181.31
-2.86 -1.55%
Volume: 294,337
Sept. 17, 2020 4:00p
P/E Ratio
13.97
Dividend Yield
N/A
Market Cap
$10.92 billion
Rev. per Employee
$1.72M
loading...
/zigman2/quotes/203808743/composite
US : U.S.: NYSE
$ 263.00
-0.62 -0.24%
Volume: 820,108
Sept. 17, 2020 4:00p
P/E Ratio
11.42
Dividend Yield
1.44%
Market Cap
$66.30 billion
Rev. per Employee
$1.44M
loading...
/zigman2/quotes/207459018/composite
US : U.S.: NYSE
$ 349.92
+4.67 +1.35%
Volume: 2.06M
Jan. 23, 2020 12:00a
P/E Ratio
30.55
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
$1.70M
loading...
/zigman2/quotes/210453738/composite
US : U.S.: NYSE
$ 304.98
-1.54 -0.50%
Volume: 2.39M
Sept. 17, 2020 4:00p
P/E Ratio
17.15
Dividend Yield
1.64%
Market Cap
$291.30 billion
Rev. per Employee
$754,157
loading...
/zigman2/quotes/203095337/composite
US : U.S.: NYSE
$ 397.50
-1.57 -0.39%
Volume: 559,183
Sept. 17, 2020 4:04p
P/E Ratio
15.12
Dividend Yield
0.63%
Market Cap
$52.79 billion
Rev. per Employee
$1.31M
loading...
/zigman2/quotes/207964487/composite
US : U.S.: NYSE
$ 29.78
+0.87 +3.01%
Volume: 1.44M
Sept. 17, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.05 billion
Rev. per Employee
$158,554
loading...
/zigman2/quotes/203657360/composite
US : U.S.: NYSE
$ 4.47
-0.15 -3.25%
Volume: 1.31M
Sept. 17, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$552.64 million
Rev. per Employee
$162,701
loading...
/zigman2/quotes/205934574/composite
US : U.S.: NYSE
$ 137.14
-0.87 -0.63%
Volume: 1.38M
Sept. 17, 2020 4:00p
P/E Ratio
14.14
Dividend Yield
0.00%
Market Cap
$46.65 billion
Rev. per Employee
$178,156
loading...
/zigman2/quotes/208539347/composite
US : U.S.: NYSE
$ 122.03
+0.54 +0.44%
Volume: 698,417
Sept. 17, 2020 4:00p
P/E Ratio
14.39
Dividend Yield
0.00%
Market Cap
$10.32 billion
Rev. per Employee
$136,878
loading...
/zigman2/quotes/205918244/composite
US : U.S.: NYSE Arca
$ 105.70
-0.35 -0.33%
Volume: 7.60M
Sept. 17, 2020 4:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,357.01
-28.48 -0.84%
Volume: 2.74B
Sept. 17, 2020 5:14p
loading...

Emma Court covers healthcare for MarketWatch from New York. You can follow her on Twitter @EmmaRCourt.

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.