(Bloomberg) -- Congress’s health-care priorities are likely to focus on drug prices as Obamacare repeal becomes a non-starter for a split legislature, Senate Majority Leader Mitch McConnell said Wednesday.
On changes to Obamacare, “I think it is very obvious that a Democratic House is not going to be interested in that,” McConnell said at a post-midterm elections news conference in Washington, after Democrats won control of the House of Representatives and Republicans added to their control of the Senate.
Instead, it’s more likely that the parties will find common ground on pharmaceutical costs -- also a major issue for President Donald Trump.
“I can’t imagine that won’t be on the agenda,” McConnell said. House Democratic leader Nancy Pelosi, who is likely to take over as Speaker of the House when her party takes control next year, said that they “will take real, very strong legislative action” on drug prices.
Health insurance stocks rose Wednesday as investors placed bets that major changes to the health-care system are off the table, for now.
The S&P 500 Managed Care Index rose as much as 4.3 percent to an all-time high, led by a rally in insurers focused on the Medicaid program. Three states passed ballot initiatives to expand Medicaid, which covers low-income people. And Maine may move ahead with a prior expansion after the Republican governor there was defeated.
Drug stocks rose as well, with one analyst calling the risks to the sector overblown. The Nasdaq Biotechnology Index, a barometer of investor sentiment about drug prices, was up 2 percent.
“We believe this outcome will cause headline risk to drugmakers, but the Republican-controlled Senate and pharma-friendly Democrats will prevent disruptive policy change,” said Andrea Harris, an analyst with Height Securities.
--With assistance from Kathleen Hunter and Tatiana Darie.
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