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.
“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.”
For months, health insurers have kept largely out of the fray over the proposal to expand Medicare, the government program that covers about 60 million mostly elderly Americans. As UnitedHealth’s chief executive officer began to wrap his remarks Tuesday morning during the company’s call with analysts, that changed.
The proposal would be a “wholesale disruption of American health care,” and would “surely have a severe impact on the economy and jobs -- all without fundamentally increasing access to care,” CEO Dave Wichmann said on the call.