Health Care Stocks Rise After Trump Vows To 'Love and Cherish' Medicare, Medicaid

Health care stocks surged on Monday, February 4, 2025, following President Donald Trump's vow to "love and cherish" Medicare, Medicaid, and Social Security. The S&P 500's second-biggest riser was health insurer Molina Healthcare, with shares jumping nearly 5%. Other health care stocks, such as Elevance Health, AbbVie, and Centene Corp, also saw significant gains.



Trump's commitment to protecting these programs comes as a relief to investors in Medicare Advantage plan providers, who had previously taken a beating due to disappointing CMS reimbursement rates. J.P. Morgan analysts have suggested that a Trump administration would likely push for more favorable rates and less scrutiny for Medicare Advantage plans, which would benefit investors in companies like Humana.

However, investors in hospital operators and vaccine makers are still concerned about potential changes in healthcare policy under a Trump administration. KeyBanc analysts have warned that there's a risk that enhanced subsidies for Affordable Care Act exchanges will expire in 2025, which could negatively impact hospitals' payor mix and profitability. Additionally, there are concerns that Trump might put anti-vaxer Robert F. Kennedy Jr. in charge of health initiatives, which could affect vaccine makers' stocks.

Despite these concerns, health care stocks continue to perform well, with the Health Care Select Sector SPDR ETF (XLV) little changed in morning trading, even as 35 of its 62 equity components were losing ground. The ETF was underperforming the broad market by a wide margin, as the S&P 500 index (SPX) surged 1.9%.

In conclusion, President Trump's commitment to protecting Medicare and Medicaid has boosted investor confidence in health care stocks, particularly those involved in Medicare Advantage plans. However, investors in hospital operators and vaccine makers remain cautious about potential changes in healthcare policy under a Trump administration. As the market continues to evolve, investors will need to stay informed about the latest developments in healthcare policy and the potential impact on their investments.