(Reuters) -Shares of U.S. health insurers jumped on Monday following a media report the White House was preparing to unveil a policy framework that would extend Affordable Care Act premium subsidies – also known as Obamacare – for two years and add new eligibility limits.
Shares of Centene (CNC) jumped about 7% and Molina Healthcare (MOH) gained around 4%, while Elevance Health climbed more than 2% in early trading.
“I think this is a bit of a relief rally as the fate of ACA subsidies came under significant doubt after the government shutdown was resolved without an extension,” said James Harlow, senior vice president at Novare Capital Management.
A two-year extension would represent a status quo and “better than feared” scenario for health insurers, he said.
Millions of ACA enrollees face sharp premium increases if the subsidies are allowed to expire on December 31 with no replacement, placing fresh attention on healthcare affordability.
Insurers had been bracing for the uncertainty associated with these large premium hikes and possible enrolment declines in 2026. The plan, which could be announced as soon as Monday according to Politico, is expected to ease those risks.
“While the reporting on these proposals is still early-stage and significant changes could still be made, we would view them as favorable for healthcare services, including the hospitals, managed care and related businesses,” Oppenheimer & Co analyst Michael Wiederhorn wrote in a note.
Shares of hospital operators HCA Healthcare rose 3.2%, Universal Health Services was up nearly 2% and Tenet Healthcare jumped 6%.
Investors had been cautious over the expiry of pandemic-era enhanced tax credits and the sector has faced uncertainty over whether subsidies would be renewed.
Public support for extending the credits remains strong. A recent poll found about three-quarters of U.S. adults favor renewing them.
(Reporting by Mrinalika Roy and Mariam Sunny in Bengaluru; Editing by Krishna Chandra Eluri and Sriraj Kalluvila)
