Big Insurances’ Stocks Are Turbulent as ACA Subsidy Extension Fails

Wall Street reacts to the failed ACA subsidy extension — and to the president’s swipe at “money sucking insurance companies.”

Wall Street got the jitters yesterday after Donald Trump’s pointed remarks about “money sucking insurance companies” and a Congressional deal that failed to extend the enhanced subsidies under the Affordable Care Act (ACA) marketplace plans. According to one market analysis, shares of Centene (CNC) plunged about 8.15% in pre-opening trade, while competitors such as Molina (MOH) fell 4.6%, Elevance (ELV) dropped 3.7%, UnitedHealth Group (UNH) slipped 1.9% and Humana (HUM) declined 1.45%.

Why the sell-off? Because the enhanced ACA subsidies — which reduce premiums for some marketplace enrollees — expire at the end of the year and without renewal, an estimated 3.8 million people could lose coverage, and premiums would rise significantly for others. Insurers that rely on the stability and growing enrollee base of the ACA marketplace face heightened risk when that funding is in question – especially when the dollars are guaranteed – like when they are shoveled out from the federal government.

Still, it’s worth noting that the ACA marketplace business is not the primary profit engine for most large payers. Their bigger gains typically come from taxpayer-funded programs like Medicare Advantage, Medicaid managed-care contracts and veterans’ / VA contracts.

Here’s how five of the major players fared in 2024 profits:

• Centene: $3.2 billion (+590% since 2014)

• UnitedHealth Group: $32.2 billion (+214% since 2014)

• Elevance: $9.1 billion (+78% since 2014)

• Humana: $2.6 billion (+8.3% since 2014)

• Molina: $1.18 billion (+780% since 2014)

Because most of their gains have not come from ACA exchange plans (and especially not the thin margin employer market) but through their other government-subsidized businesses, investors can have some certainty their investments in those companies are still largely safe and Big Insurance will be able to weather this storm.

For instance, the industry has always been able to strongarm rough patches in the consumer market – as long as they can stave off any meaningful changes to their bread and butter taxpayer-funded programs. As we reported last month, the industry’s outside PR and lobbying friends – Better Medicare Alliance and Medicare Advantage Majority – have hit the airwaves and the halls of Congress to halt the advancement of the No UPCODE Act. The bipartisan bill, sponsored by Senators Bill Cassidy (R-LA) and ​​Jeff Merkley (D-OR) would end wasteful, fraudulent practices in Big Insurance’s Medicare Advantage businesses that funnel taxpayer money into the pockets of industry executives and Wall Street shareholders and could save taxpayers as much as $124 billion over the next decade and keep the Medicare Trust Fund solvent for years longer.

As of this morning, insurers seem to be fairing better. Centene, UnitedHealth Group, Elevance, Humana and Molina are all back in the green.