Shares of CVS Health Corp (NYSE:CVS) are trading higher Thursday afternoon. The stock is rising as a Republican legislative package targeting major tax and healthcare changes faces a considerable obstacle in the U.S. Senate.
What To Know: According to a report from USA TODAY, the Senate’s parliamentarian, Elizabeth MacDonough, ruled on June 26 that several key provisions aimed at overhauling Medicaid could not be included in the bill under the Senate’s budget reconciliation rules.
The provisions, which included work requirements and restrictions for non-citizens, were designed to reduce federal spending on the health insurance program for lower-income families.
The ruling is being viewed as a major blow to the bill’s prospects as Democrats celebrated the decision. “Democrats fought and won, striking health care cuts from this bill that would hurt Americans walking on an economic tightrope," Senator Ron Wyden told USA TODAY.
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Why This Matters: This legislative setback is likely causing CVS stock to rise because a significant portion of the company’s revenue is tied to the stability of the American healthcare system, including programs like Medicaid.
The proposed cuts to Medicaid, had they been successful, could have resulted in millions of Americans losing their health insurance coverage. This would directly translate to fewer prescriptions being filled at CVS pharmacies and a reduction in the number of members in the Aetna health insurance plans it owns.
By blocking these cuts, the immediate threat to this substantial revenue stream is removed, providing investors with greater confidence in CVS’s future earnings and financial stability.
Price Action: According to data from Benzinga Pro, CVS shares are trading higher by 1.9% to $67.62 Thursday afternoon. The stock has a 52-week high of $72.51 and a 52-week low of $43.56.
How To Buy CVS Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in CVS Health’s case, it is in the Health Care sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
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