UnitedHealth Group (UNH) and other major health insurers breathed a sigh of relief. A federal judge in Maryland has temporarily blocked the Trump administration from implementing changes to the Affordable Care Act (ACA) health insurance marketplace. The ruling, delivered on Friday, comes just days before the new regulations were set to take effect on August 25.
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U.S. District Judge Brendan Hurson ruled in favor of the plaintiffs, which include the city of Chicago and Doctors for America. The lawsuit argued that the “Marketplace Integrity and Affordability” rule could cause more than 2.2 million Americans to lose their healthcare coverage.
It must be noted that just before the ruling, UnitedHealth disclosed plans to withdraw its ACA individual health plans from seven counties in Colorado. The move will impact about 26,000 residents who must find new coverage starting November 1. Rising medical costs and regulatory uncertainty were cited as key reasons for the exit.
Here’s What It Means for UnitedHealth
The ruling offers short-term relief to UnitedHealth and its peers, including Centene (CNC), Molina Healthcare (MOH), Oscar Health (OSCR), Elevance Health (ELV), CVS Health (CVS), and Cigna (CI).
This is because the proposed changes were designed to tighten eligibility and reduce improper enrollments. Also, the rule would have imposed higher fees on enrollees.
The pause means insurers will not immediately face the burden of extra paperwork and potential member churn that could have come with the new rule. It also gives companies such as UnitedHealth more time to adjust prices and coverage without rushing to meet new rules.
Is UNH a Good Buy Right Now?
UnitedHealth may be worth a look for long-term investors. Despite a rocky year, marked by rising medical costs, regulatory scrutiny, and a sharp drop in share price, Wall Street sentiment remains optimistic.
Turning to Wall Street, UNH stock has a Strong Buy consensus rating based on 18 Buys, two Holds, and one Sell assigned in the last three months. At $316.10, the average UnitedHealth stock price target implies a 2.82% upside potential.
