Why Oscar Health, Molina, and Elevance Plunged

The recent “beautiful bill” created chaos for Medicaid stocks in the last week. Molina Healthcare (MOH) traded in the $300-$350 range throughout the last year. That broke down in July. MOH lost nearly 40% in only one month.Near-term headwinds are mounting. On July 10, Morgan Stanley lowered its rating on MOH stock. It cited that Centene (CNC) withdrawing its outlook for 2025 was problematic. Centene is experiencing higher cost trends in its Medicaid division. Also, business for the Affordable Care Act plans is worsening.Molina pre-announced Q2 results. It lowered its expectations, citing medical cost pressures for three lines of its businesses.Trading at nearly $350 recently, Elevance Health (ELV) closed at $277.09 last week. The company posted revenue rising by 14.3% Y/Y to $49.42 billion. However, net income for the year is lower than previously projected. Elevance cited ongoing elevated cost trends in ACA and Medicaid.Oscar Health (OSCR) fell in sympathy with Centene’s decline. In addition, Wells Fargo analysts downgraded CNC stock. They cited that rising medical costs and weak pricing would hurt earnings. Brace for medical loss ratios in 2025 to worsen.3-5 Year Long-term Investment Investors who bought any of those stocks have significant losses. This is a 3-5 year long-term investment, with near-term risks. The stock declines might continue as shareholders sell to avoid further losses.