Health insurance company stocks rose sharply this week as Washington considers extending tax credits for Affordable Care Act (ACA) individual market plans. The potential for a two-year deal—which would keep premiums more affordable—has Wall Street optimistic, despite a year of headwinds for the industry.
Context: The ACA Subsidies
The subsidies, enhanced in 2021, allow millions of Americans to buy health insurance under the ACA, also known as Obamacare. These tax credits lower monthly premiums, making coverage accessible to more people. Enrollment reached a record 24 million this year—the highest ever—because of these enhanced subsidies.
The stakes are high: If Congress fails to act, millions could face significantly higher premiums in 2026. Without the credits, coverage would become unaffordable for many, potentially reversing the ACA’s gains in coverage.
Trump’s Role and Market Reaction
Former President Trump’s mixed signals on an extension are influencing investor sentiment. While he expressed reluctance, calling the ACA a “disaster,” he acknowledged that “some kind of an extension may be necessary” to achieve other political goals.
Wall Street analysts favor a two-year extension over no deal or a short-term fix. Ann Hynes of Mizuho Securities USA notes this is “favorable compared to street expectations.” Companies with heavy ACA enrollment—Cigna, Centene, Molina Healthcare, Elevance Health, and UnitedHealth Group—stand to benefit the most.
Stock Performance This Week
The industry saw one of its best weeks of the year despite earlier profit warnings from rising medical costs. Several insurers lowered their 2025 guidance due to higher-than-expected claims as patients resumed delayed care. Still, investor confidence returned with the subsidy deal talks.
- Oscar Health shares jumped over 26% this week, closing at $18.16—up $1.43 per share.
- Elevance Health (Blue Cross and Blue Shield) rose nearly 1%, gaining over $20 per share this week.
- Molina Healthcare and UnitedHealth Group also saw gains of 7% and 5%, respectively.
What Happens Next?
The debate over the subsidies is not just about insurance company profits. It’s about the financial stability of millions of Americans who rely on the ACA for affordable health care. As AHIP CEO Mike Tuffin argues, inaction would lead to “the largest-ever increase in health care costs” next year.
The outcome will depend on political negotiations. Whether a deal is reached—and what it looks like—will determine the future of the ACA individual market and the financial health of millions of policyholders.
