U.S. Democrats Seen Favored in Midterms; Wall Street Eyes Medicaid-Exposed Hospital Stocks

[Financial News]  With the U.S. midterm elections set for November 3, forecasts of a strong chance that Democrats will retake the House have drawn Wall Street’s attention to hospital and healthcare services stocks. Analysts say hospitals that treat Medicare and Medicaid patients could benefit from policy changes, including a delay to cuts in Medicaid payments.
According to the midterm election forecast model from U.S. election analysis firm Decision Desk HQ (DDHQ), as of the 22nd (Korea time), Democrats had a 78% chance of winning a majority in the House and a 56% chance in the Senate. The Republican Party’s chances of securing a majority were 22% and 44%, respectively. The figures, updated on the 21st local time, showed Democrats favored in the House and narrowly ahead in the Senate.
In a midterm election report issued on the 4th, investment bank Jefferies identified hospital stocks as a sector that could benefit from the election. Brian Tanquilut, an analyst covering healthcare services, said that if Democrats secure a majority in either the House or the Senate, the schedule for cuts to Medicaid payments to hospitals under the One Big Beautiful Bill Act (OBBBA) could be delayed.
Tanquilut said Democrats could pursue the related adjustments through federal government debt-ceiling negotiations. The stocks cited in the report were HCA Healthcare (HCA), Tenet Healthcare (THC), Community Health Systems (CYH) and Acadia Healthcare (ACHC).
U.S. healthcare stocks have risen in recent months. Major international media outlets reported on the 19th (local time) that the S&P 500 healthcare sector index had gained more than 9% over the preceding three months.
Major hospital stocks also outperformed the market average. According to healthcare publication Becker’s Hospital Review, from June 30 to October 16 this year, Tenet Healthcare rose 42.9%, Universal Health Services (UHS) gained 24.5%, and HCA Healthcare rose 17.7%. The S&P 500 gained 2.1% over the same period.
Some observers say the recent gains are difficult to explain solely by election-related optimism. Barron’s also cited investors’ shift into traditional defensive sectors such as healthcare, amid growing concerns about artificial intelligence (AI)-related stocks, as a factor behind the rise in share prices.
Medicare is public health insurance mainly for people aged 65 and older and certain people with qualifying disabilities, while Medicaid is a healthcare coverage program for low-income people and others. Because hospitals treat patients enrolled in these programs and receive payments for their care, changes to payment standards and funding affect hospital operations. The key potential benefit identified in this Jefferies analysis is a possible delay to cuts in Medicaid payments to hospitals.
Election results do not automatically lead to expanded support or the reversal of existing cuts. Jefferies assessed the possibility of reinstating expanded premium subsidies under the Patient Protection and Affordable Care Act (ACA) as lower than the possibility of delaying cuts to Medicaid payments.
In an analysis released on the 8th, JPMorgan Asset Management likewise said that even if Democrats secured majorities in both the House and Senate, large-scale policy changes would face constraints. Whether expectations that hospital stocks will benefit translate into actual policy changes therefore depends on the makeup of Congress after the election and the outcome of budget and debt-ceiling negotiations.


[email protected] Kim Gyeong-a Reporter