Health insurance company stocks surged on Monday following news that the White House and Republicans in Congress are considering extending tax credits for low and moderate-income individuals to help them afford individual coverage under the Affordable Care Act. This development has positively impacted the stock market, with companies like UnitedHealth Group Inc. seeing a rise in stock prices. Photographer: Michael Nagle/Bloomberg
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Health insurance company stocks rose on Monday as the White House and Republicans in Congress discussed extending tax credits for individuals to make health insurance more affordable under the Affordable Care Act.
The tax credits, also known as subsidies, play a crucial role in reducing health insurance premiums for individuals. The Biden administration and the Democratic-controlled Congress enhanced these subsidies in 2021, leading to increased enrollment in the ACA’s individual coverage. The popularity of Obamacare reached new heights as more Americans were able to access affordable coverage.
A Politico report on Sunday indicated that the White House is planning to introduce a health policy framework, including a two-year extension of Obamacare subsidies and new eligibility limits to prevent premium spikes.
Concerns have been raised by Republicans in Congress about potential blame for premium increases if the subsidies are not extended. Polls show strong support among Republicans for Congress to continue tax credits.
Details of the proposed extension are yet to be revealed by the White House or Republicans in Congress. A report on Monday mentioned that the White House announcement is facing delays due to Congressional opposition.
The news of a potential extension led to a rise in stock prices for health insurance companies with a significant number of Obamacare enrollees.
Oscar Health, a major provider of Obamacare with approximately 2 million enrollees, saw its shares increase by more than 20% in mid-afternoon trading on the New York Stock Exchange. Similarly, Centene, with over 5 million Obamacare enrollees, experienced a rise of more than 5% in its stock prices. UnitedHealth Group, the parent company of UnitedHealthcare, also observed a slight increase in share prices.
If the tax credits are not extended, individuals purchasing coverage through healthcare.gov or state exchanges could face substantial premium hikes. Health insurers have warned of potential increases of 75% or more. Open enrollment for health insurance began on November 1 and will continue until December 15.
Insurers have already started to see a decline in customer numbers without the enhanced subsidies. For instance, UnitedHealthcare mentioned that significant rate increases could lead to a two-thirds reduction in its Obamacare customer base.
As of now, America’s Health Insurance Plans, the industry’s trade group and lobby, has not provided any comments on the matter.
