S&P 500 health care stocks mounted a huge rally on Friday, likely for more than one reason. Oscar Health, whose main business is providing Affordable Care Act marketplace coverage, suggests one likely explanation is belief in a bullish outcome for renewal of expanded ACA premium subsidies, which is central to the government shutdown.
However, prediction markets aren't expecting a quick deal. Polymarket shows 18% odds that the government shutdown will run less than 10 days.
S&P 500 Health Care Stock Rally
Humana, which doesn't offer ACA individual market plans, was the top stock on the S&P 500 on Friday for an entirely different reason. Humana provided an update on its Medicare Advantage business late Thursday, revealing "operational improvements" and predicting that "meaningfully" more than 20% of members will be enrolled in 4-Star MA plans in 2027.
Health insurers competing in both ACA and Medicare Advantage markets also were among the top S&P 500 performers on Friday. Those included Centene, Elevance Health, Cigna, Molina Healthcare and UnitedHealth Group.
Humana, trying to bounce back from a poor performance in its Medicare Advantage business, was one of the top three performing stocks on the Dow Jones Industrial Average over the past month.
CVS Health, which dropped out of the ACA exchange business for 2026, also climbed on Friday. But its 1.3% gain notably lagged other managed-care players. However, CVS has been hitting 52-week highs so there wasn't cause for a rebound.
In addition, hospital stocks climbed. That would be expected if an extension of subsidies avoids a rise in the uninsured population. An Urban Institute study found that health care providers will face $32 billion in lost revenue in 2026 if the subsidies expire.
Political Worry Over ACA Subsidies
The Wall Street Journal reported on Thursday that President Donald Trump's advisors were worried that an expiration of the enhanced ACA subsidies could hurt Republicans in the midterm elections.
The Congressional Budget Office has said that extending the enhanced subsidies would cost $350 billion over 10 years. The subsidies, first passed in 2021 and extended as part of the Inflation Reduction Act, remove the subsidy cutoff at 400% of the poverty level.
Kaiser Family Foundation analysts estimate that the average enrollee would save $1,016 in premium payments next year if the subsidies are extended.
HUM, CNC, UNH, OSCR
Oscar Health stock surged 8% to 20.84, clearing a 20.77 buy point from a cup-with-handle base, according to MarketSurge.
Among S&P 500 names, Humana rose 9.1% Friday, Cigna 5.5%, Elevance 4.7%, Centene 4.5%, Molina 3.6%, and UNH 2.7%.
Among hospital operators, HCA Healthcare rose 1.1%, Tenet Healthcare 0.5%, Community Health Systems 1.3% and Universal Health 1.05%.
Meanwhile, the S&P 500 climbed 0.5%, trending toward another all-time closing high.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
