Trump Administration Healthcare Reform: Effects on Healthcare Industry Stock Performance

Abstract

The Affordable Care Act (ACA) completely reshaped the healthcare system in the United States. Under the Trump Administration a few of its key components have been effectively eliminated. These reforms have directly targeted the health insurance industry but have far reaching impacts for the entire healthcare system. This study investigates the effects of the executive order eliminating federal Cost-Sharing Reduction Subsidies (CSRs) (October 12, 2017) and the effective elimination of the Individual Health Insurance Mandate (December 22, 2017), both originally established by the ACA, on the capital market response to the health insurance, health care services, and pharmaceutical industries. These dates are both significant because they provide new information to the market surrounding future rates of insurance coverage. Overall, the results of this study conclude that the elimination of CSRs had a negative effect on the pharmaceutical and health care services industry capital market positions, while the effective elimination of the Individual Health Insurance Mandate had a negative effect on the health insurance and pharmaceutical industries.