Major health insurance stocks largely lagged behind a broader market advance Wednesday after Congress reached a last-minute deal to keep the U.S. economy from hitting a so-called "fiscal cliff" of tax hikes and deep spending cuts.
A bill that cleared Congress late Tuesday averted the tax hikes and delayed the spending cuts for a couple months. Analysts saw the agreement as a mixed bag for health insurers.
Bernstein Research analyst Ana Gupte called it a "modest positive" for the sector. Gupte said in a research note the delay in spending cuts means insurers won't have to deal with a planned, across-the-board spending cut for Medicare at least through February. The agreement also averts a steep payment cut for doctors.
Medicare is the federally funded program that provides health coverage for the elderly and disabled people. Analysts see Medicare Advantage plans —which are privately run versions of the government program — as a big growth opportunity for managed care.
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