One Big Beautiful Bill Act: A Boon or Bane for Centene?

Centene Corporation CNC, a major player in government-sponsored healthcare — including Medicaid, Medicare Advantage, and ACA marketplace plans — faces both opportunities and challenges under the One Big Beautiful Bill Act (OBBBA). Enacted in July 2025, this sweeping healthcare reform aims to simplify and digitize the U.S. healthcare payment system by consolidating medical billing and reducing administrative inefficiencies.

However, the bill also introduces significant cost-containment measures. Notably, it includes approximately $1 trillion in federal Medicaid cuts over the next decade and mandates eligibility verification every six months, which could raise administrative costs. Additionally, reductions in ACA subsidies may depress enrollment in individual marketplace plans—a key area where Centene holds a leading market share, about 23%.

Despite these headwinds, Centene stands to gain from the bill’s emphasis on billing standardization and digital infrastructure. With its scale and disciplined cost management, the company is well-positioned to enhance claims accuracy, reduce denials and improve cash flow. That said, transitioning to a unified billing system may involve substantial near-term investments in IT systems and compliance. Stricter billing regulations and standardized reimbursement rates could also put pressure on margins.

Nevertheless, Centene’s nationwide presence and deep experience navigating complex regulations provide it with a competitive edge. The new regulatory landscape also presents opportunities for Centene to develop tailored individual products and expand into private markets to offset potential Medicaid revenue losses. If the company manages this transition effectively, it could emerge leaner, more resilient and well-adapted to the evolving healthcare environment.

How Are Other Government Sponsored Health Plan Providers Placed?

Molina Healthcare MOH, with nearly 88% Medicaid membership, faces major revenue challenges under OBBBA. Molina could be hit by tighter eligibility and shrinking enrollment. Still, Molina’s strong cost discipline and coordinated care model may support resilience amid the shifting healthcare policy environment.

UnitedHealth Group UNH, with substantial Medicaid exposure, could also face revenue challenges due to OBBBA, given tighter eligibility and reduced enrollment. While UnitedHealth's diversified portfolio offers some protection, it must proactively respond to regulatory changes to safeguard its position in the government-sponsored healthcare market.

CNC’s Price Performance

Shares of CNC have lost 57.6% year to date, underperforming the industry.

CNC’s Expensive Valuation

CNC trades at a forward 12-month price-to-earnings of 8.98, below the industry average of 11.96.

Estimate Movements for CNC

The Zacks Consensus Estimate for CNC’s second-quarter and third-quarter 2025 EPS witnessed a southward revision over the past seven days. The consensus estimate for full-year 2025 and 2026 EPS also followed suit.

The consensus estimate for CNC’s 2025 revenues indicates a year-over-year increase but the same for EPS suggests a decline. For 2026, the case is exactly the opposite.

CNC stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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