By Josh Nathan-Kazis

The House spending bill that passed in a nail-biter vote early Thursday would bring dramatic changes to the Medicaid program, including new work requirements that would kick in late next year.

The bill's provisions have been discussed for months, but passage hadn't been a sure thing, and shares of managed care companies that offer Medicaid plans, including Centene, Molina Healthcare, and Elevance Health were down Thursday morning.

The bill also has a little-noticed change to the Medicare price negotiation program created in 2022 by President Biden that would be favorable to drugmakers, and seems to contradict some of the Trump administration's recent rhetoric on lowering drug prices.

Other changes in the bill would affect companies like Oscar Health that offer plans on the insurance exchanges created by the Affordable Care Act. The details are highly technical, but Oscar shares were also down Thursday morning.

The biggest news in the bill is the impact on Medicaid, the health insurance program for low-income Americans that is jointly funded by the federal government and the states. Most states contract with managed care companies to operate their plans.

Under the new bill, certain adults enrolled in Medicaid would need to work at least 80 hours a month, or complete at least 80 hours of community service a month, to remain eligible for Medicaid benefits.

The Congressional Budget Office said on May 11 that the bill's Medicaid provisions would increase the number of people without insurance coverage by 7.7 million, and it said May 20 that the bill would result in $698 billion less in federal subsidies to Medicaid between 2026 and 2034.

Last-minute changes, including an amendment that moves the implementation of the work requirements up by three years, mean those estimates are likely out of date.

But the bottom line is that if the bill passes the Senate and is signed into law in its current form, millions fewer people would be on Medicaid.

"It is going to reduce Medicaid enrollment," Raymond James healthcare policy analyst Chris Meekins told Barron's early Thursday. Meekins says he expects a 5% to 7% decrease in Medicaid enrollment.

Meekins said he thought the decrease would be "manageable, to a point," for insurers.

But shares of the largest Medicaid contractors were down on Thursday. Centene shares were down 2.6%, Molina shares were down 1.9%, and Elevance shares were down 2.6%. Fewer people with insurance also means fewer customers for healthcare providers, and hospital stocks were also down: HCA Healthcare was down 1.1%, while Tenet Healthcare was down 1%.

The changes to the Medicare price negotiation program were garnering less attention early Thursday, but could also have an impact. The provision in the bill, which echoes proposed legislation that the drug industry has supported, would exempt medicines from price negotiation for longer if they at any point had been the only drug approved to treat a specific rare disease.

Today, so-called "orphan" drugs that are the only medicine to treat a rare condition aren't eligible for negotiated prices. The bill would extend that exemption by starting the eligibility countdown for a drug that loses orphan status not at the date of its original approval, but at the date when another drug is approved for the rare condition. The CBO estimated that the provision will increase federal spending by $4.8 billion through 2034.

Biotech and pharma stocks were not making big moves Thursday, overall.

As for the changes to the Affordable Care Act's health insurance exchanges, they include new restrictions on enrollment in the plans, changes to reenrollment practices, and other updates. Oscar shares were down 2.3%.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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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May 22, 2025 12:39 ET (16:39 GMT)

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