By Elsa Ohlen

With less than day to go until polling opens around the country, the race for the White House is as close as ever.

While the economy, inflation and immigration have dominated the election debate, who wins the presidency, Senate and House of Representatives could have a meaningful impact on healthcare services stocks as well, especially managed care and hospitals.

In a fresh research note published Sunday, Mizuho analyst Ann Hynes argues that companies with exposure to Medicare Advantage $(MA)$ -- the government-funded health program for seniors -- are a good play in case Republican candidate Donald Trump wins a second term. According to the bank's own analysis, a Republican win of both the presidency and the Senate looks like the most likely outcome, with the House still a toss-up.

Healthcare reform was a top priority throughout the Trump administration 2016-2020 but is a much smaller part of his 2024 campaign. That said, Trump is likely to continue where he left off on healthcare policy, Hynes said.

Trump is expected to be notably softer than Harris on Medicare Advantage, a program that he championed as president. Humana, which is close to a MA pure play, looks like the most levered to a Trump win.

In a note from September, Hynes wrote MA players such as Centene, CVS Health and UnitedHealth Group would also likely benefit in the case of a Trump victory.

There are two key concerns among investors heading into the election. First, the looming expiration of enhanced subsidies on commercial health insurance plans purchased through Affordable Care Act $(ACA)$ exchanges, currently set to expire by 2025.

Secondly, the potential for Medicare Advantage reform. Medicare Advantage has been a focus of both the Biden and Trump administrations, where Trump focused on expanding membership and championed the program as a private alternative to government care for seniors, while Biden focused on increasing regulations and lowering government payments to MA plans.

Interestingly, Hynes notes that managed care has historically outperformed 12 months after presidential elections, regardless of whether the election results in a balance of power. That's another argument in favor of managed healthcare stocks right now.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 04, 2024 08:08 ET (13:08 GMT)

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