The US Government Shutdown: Asymmetric Opportunities in Healthcare

Asymmetric bet on Oscar Health (NYSE: OSCR)

TL;DR

The U.S. government shutdown is likely to hurt Republicans more than Democrats, with President Trump taking much of the blame. To resolve the stalemate, Republicans will likely need to concede on healthcare, a central Democratic priority. This would directly benefit the healthcare industry, particularly Oscar Health (OSCR), whose revenues are heavily dependent on ACA subsidies. The stock already trades at a discount because the market assumes subsidy expiration is inevitable. That downside is priced in, but if Democrats secure a healthcare win, Oscar Health could be repriced significantly higher.

Current Shutdown Details

Congress has repeatedly failed to pass a funding package, leaving the government closed and tens of thousands of workers furloughed. Both parties are pointing fingers: Republicans accuse Democrats of tying healthcare to budget talks, while Democrats argue that healthcare cannot wait, pa…