Americans and investors have a lot riding on Tuesday’s midterm elections, but the health care industry in particular is hanging in the balance.
On Monday, Height Capital Markets named four themes in the health care sector that will be shaped by the election outcome:
- A Democratic majority in the House and/or Senate would pose a threat to pharmaceutical prices.
- A Republican majority in both houses of Congress would pose a threat to the future of the Affordable Care Act.
- California’s Proposition 8 would limit commercial reimbursements for outpatient dialysis to 1.15 times the cost of the care.
- Ballot propositions in Idaho, Montana, Nebraska and Utah could potentially expand Medicaid programs in those states.
While the impacts on pharmaceutical companies and insurance companies related to the first two themes are well-documented, Height dug deeper into the potential fallout from the second two themes.
Analyst Andrea Harris recently said Proposition 8 has roughly a 25-percent chance of being passed in California. Based on contributions to anti-Proposition 8 advertising campaigns, Davita Inc (NYSE: DVA) ($66 million in contributions) and Fresenius Medical Care AG & Co. (NYSE: FMS) ($33 million in contributions) would presumably be big winners if the initiative is defeated.
“Proposition 8 supporters are not nearly as well-financed, with just $18.8 million in spending and less than $200,000 remaining on hand,” Harris wrote Oct. 26.
When it comes to Medicaid expansion votes, Harris said she expects the proposals to pass in all of the states mentioned above except Montana.
“Combined with Virginia and Maine, which we also expect to expand Medicaid in 2019, Medicaid expansion will have notable upside potential for incumbent managed care organizations and providers in most of these states,” the analyst said.
The analyst lists the following MCOs and providers as potential winners:
- Aetna Inc (NYSE: AET)
- Anthem Inc (NYSE: ANTM)
- Centene Corp (NYSE: CNC)
- Magellan Health Inc (NASDAQ: MGLN)
- UnitedHealth Group Inc (NYSE: UNH)
- WellCare Health Plans, Inc. (NYSE: WCG)
- Acadia Healthcare Company Inc (NASDAQ: ACHC)
- Community Health Systems (NYSE: CYH)
- HCA Healthcare Inc (NYSE: HCA)
- LifePoint Health Inc (NASDAQ: LPNT)
- Quorum Health Corp (NYSE: QHC)
- Tenet Healthcare Corp (NYSE: THC)
- Universal Health Services, Inc. Class B (NYSE: UHS)
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