Stocks related to Medicare experience growth following subpar Biden debate showing.
On Thursday night, President Joe Biden's poor debate performance was seen as a potential boost for a group of health insurance stocks, as it increased the likelihood of another term for former President Donald Trump.
According to RBC analyst Ben Hendrix, the rally in Medicare Advantage stocks on Friday was driven by the belief that a second Trump term would ease regulatory and reimbursement challenges facing managed care stocks, particularly Medicare Advantage leaders such as Humana, Anthem, and WellPoint.
As of noon Eastern time, UnitedHealth and CVS experienced gains of more than 2%, while Humana gained more than 4%. Despite these gains, all three companies are down on a year-to-date basis. United Health is projected to have a decline of 5% in 2024, while Humana is expected to have a nearly 18% decline and CVS is projected to have a close to 25% decline.
The resurgence of medical costs among seniors has put pressure on these shares due to regulatory changes in Medicare Advantage reimbursement.
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