President Donald Trump ordered a halt on major key Obama-era federal payments to insurance companies late Thursday — a move that rattled health insurers.
The six insurers tracked by the S&P 500 Managed Health Index lost a combined $14.6 billion between the market’s close on Thursday and Friday. Shares of UnitedHealth Group shed 0.21%, Cigna fell 0.43%, Aetna lost nearly 1%, Humana dipped 1.5%, Anthem slid 3%, while Centene dropped 3.3%.
That came on a day when the overall S&P 500 remained relatively flat.
The dip for health insurers came after Trump announced late Thursday that he would end the cost-sharing reduction payments under the Affordable Care Act. Under the act, insurers were required to provide lower co-pays to their low-income consumers. The cost-sharing reduction payments were expected to go to insurers to bridge the difference. Now without the cost-sharing reduction payments, insurers are expected to fill in the financing blank themselves. Some 7 million people qualified for the subsidies in 2017.
Still, according to Larry Levitt, senior VP of the Kaiser Family Foundation, the woes could have been worse for the insurers.
“Some insurers hiked premiums accross the board for 2018 assuming CSRs would end,” he wrote via Twitter. “Many insurers assumed the cost-sharing payments would end and were allowed by states to raise premiums for 2018 to offset the loss.
Blue Cross and Blue Shield of North Carolina for example said it would have raised premiums by about 9% had Trump agreed to continue the cost-sharing reduction payments. They instead raised premiums by over 20%.
Meanwhile, attorneys general such as the New York’s Eric T. Schneiderman have threatened to sue.
Overall however, insurers are still trending higher than they were prior to Trump’s election. The S&P 500 Managed Health Care Index is up about 45% in the past 12 months.