US Presidential Election’s Impact on Health Care Stocks and Sector

The upcoming US presidential election is anticipated to significantly impact the health care sector, with varying consequences depending on the election outcome, according to analysts from Piper Sandler.

The firm predicts that comprehensive health care reform is unlikely, regardless of which party secures the presidency, as both major political parties appear to lack the desire for sweeping reforms.

Analysts from Piper Sandler suggest that a Republican victory could lead to a partial or full rollback of the enhanced subsidies under the Affordable Care Act (ACA), which were enacted in 2021 and renewed later. This shift could result in a decrease in the number of insured individuals and escalate financial challenges for hospitals due to increased bad debt. Furthermore, there may be modest cuts to Medicaid, potentially through the introduction of work requirements.

Additionally, the Republican Party is expected to foster a more favorable regulatory environment for health care, which might involve reversing Biden’s laboratory-developed test rule and reinstating Trump’s breakthrough device rule.

On the flip side, if the Democrats gain control, the likelihood of cuts to Medicare Advantage is heightened, particularly under a Harris administration. While Medicare Advantage plans enjoy wide support, there could be increased regulatory and legislative risks regarding reimbursement rates under a Democratic government. Piper Sandler emphasizes that “Medicare Advantage cuts are more likely with Harris in the White House.”

The drug industry may also face challenges if Democrats come to power, with the potential for more medications to be subjected to price controls and limits on out-of-pocket expenses possibly extended to the private sector. The firm notes that while a Democratic sweep is improbable, should it occur, there would likely be an expansion of price controls.

Conversely, it is suggested that even if Trump were to return to office, he would not reverse the existing drug pricing provisions.

While significant health care reforms are not expected, Piper Sandler envisions that certain bipartisan health care changes could still be passed into law, potentially during a lame-duck session in December.