Health Stocks Crumble as Fears of 'Medicare for All' Snowball [View all]

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Bloomberg - Drew Armstrong and John Tozzi April 17, 2019

Politics can be an ugly business. Health-care politics, especially so. Health-care companies that get mixed up in politics? That was $28 billion worth of ugly on Tuesday, and the stock market damage continued on Wednesday.

“Presidential primary politics,” said Evercore ISI analyst Michael Newshel, are “more in focus than fundamentals.”

The slide began in earnest on Tuesday when UnitedHealth Group Inc. -- treated by investors as a bellwether for the insurance sector -- waded into the debate over “Medicare for All,” which would expand government-administered coverage to most of the population and rewrite the businesses of U.S. health insurers, hospitals and doctors.

While it’s a longshot to become law despite the backing of some contenders for the Democratic presidential nomination, the proposal has the power to upend company stock prices. Together, the shares of hospitals and insurers lost $28 billion in market value on Tuesday, according to data compiled by Bloomberg. The Tuesday losses capped the worst five-day stretch since 2011 for health insurers, despite UnitedHealth reporting earnings that beat analysts’ estimates and raising its 2019 forecast.

The slide in hospital and insurance stocks continued Wednesday, wiping out billions of dollars more in market value from some of the biggest health companies in the U.S. UnitedHealth fell 3.2 percent at 2:20 p.m. in New York. Its competitor Anthem Inc. was down 6.8 percent, and Cigna Corp. slid 5.1 percent. Hospital chain HCA Healthcare Inc. dropped 3 percent, and Community Health Systems Inc. lost 5.5 percent.

Last week, Senator Bernie Sanders of Vermont, who is contending for the Democratic presidential nomination, discussed his support of Medicare for All at Fox News town hall in Bethlehem, Pennsylvania, on Monday night. Fox anchor Bret Baier asked the audience at the event to raise their hands if they had private health insurance from an employer.

“Now of those, how many are willing to transition to what the senator says, a government-run system?” Baier asked the crowd. There were cheers in the room as people raised their hands, and afterward Sanders posted a clip from the event, tweeting “raise your hand if you’re sick and tired of your private health insurance company.”

Last week, Sanders specifically called out UnitedHealth, saying in an April 12 tweet “your greed is going to end.”

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