Shares of hospital operators came under pressure on Friday after Politico reported that GOP lawmakers are looking to curtail the federal matching funds allocated to the Medicaid program.
The federal government partially funds the state-based Medicaid program based on a matching rate, contributing a minimum of 50% of states’ Medicaid costs.
To qualify for federal dollars, states are also required to contribute with their matching funds. However, Republicans want to stop states from taxing insurers and healthcare providers to raise those funds, according to Politico.
The maneuver is aimed at filling an estimated $880B revenue gap created by a potential extension to President Trump’s 2017 tax cuts.
Notable decliners include HCA Healthcare (NYSE:HCA), Community Health Systems (CYH), Universal Health Services (NYSE:UHS), Surgery Partners (SGRY), Tenet Healthcare (NYSE:THC), SunLink Health Systems (SHY), Select Medical Holdings (NYSE:SEM), and LifeStance Health Group (LFST).
Meanwhile, Acadia Healthcare (ACHC) is trading sharply lower after the mental care provider’s Q4 2024 financials and its 2025 outlook fell short of Street forecasts.
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