What Happened?

Shares of health insurance company Oscar Health (NYSE: OSCR) fell 6% in the afternoon session after investor concerns over rising medical costs and the expiration of healthcare subsidies fueled bearish market activity. 

The negative sentiment was reflected in the options market, where there was a higher demand for bets that the stock price would fall. This pressure came from fundamental challenges facing the company. Oscar Health, like other insurers, experienced a rise in its medical loss ratio because of increased use of services by its members. This trend contributed to the company posting a quarterly operating loss of around $129 million. Furthermore, the expiration of pandemic-era subsidies for individuals was expected to reduce the number of people paying for insurance, potentially leading to fewer customers for Oscar Health in the future.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Oscar Health? Access our full analysis report here.

What Is The Market Telling Us

The previous big move we wrote about was 7 days ago when the stock gained 22.1% on the news that a Politico report revealed that the White House plans to pitch a two-year extension of Obamacare subsidies. The proposal would extend subsidies set to expire at the end of the year, with new eligibility limits for individuals with incomes up to 700% of the federal poverty line. These subsidies, a key part of the Affordable Care Act (ACA), help lower the cost of health insurance for consumers, making them crucial for insurers focused on the ACA marketplace. An extension would likely support sustained enrollment, securing a key revenue stream for these companies.

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