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What a Democratic Sweep Means for Healthcare

We think the insurers could be most influenced by potential reforms.

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The Democrats have won the remaining two U.S. Senate seats in the Georgia runoffs, and we expect Joe Biden's administration will seek to implement further healthcare reforms. However, with such a slim majority in the Senate, compromises on ideals espoused by the Biden campaign may be required to get healthcare legislation passed with support from moderate Democrats. With significant compromises possible in the next several months as the legislation is crafted, we will keep steady on our economic moat and valuation views until more clarity emerges on the potential changes to the healthcare industry.

Overall, even in a Democratic sweep where further healthcare reforms are possible, Biden's existing proposals to expand the insured population create a spectrum of opportunities and risks for healthcare players, in our opinion, and the devil will be in the legislation’s details in terms of how it will affect healthcare industry players. In general, though, the United States appears likely to remain in increasing access mode under Biden’s plan. The administration estimates that at least 97% of Americans would be covered under the president’s proposals, up from about 91% before the coronavirus pandemic and associated weakness in the U.S. employment market.

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Julie Utterback does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.