UnitedHealth and other health insurers are surprised by “Medicare for All” concerns

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The Medicare for All specter continued to haunt health insurance stocks after one of the strongest proponents of the idea, Senator Bernie Sanders (Ind., Vt.), Received a surprisingly positive response to the idea at a Fox News town hall Monday night in Bethlehem, Penn .

Industry leader

UnitedHealth Group

(UNH) saw its shares fall $ 9.27, or 4%, to $ 220.93 on Tuesday, despite posting better-than-expected earnings of $ 3.73 per share for the first quarter, up from 23% corresponds to the same period of the previous year and 13 cents above the consensus estimate.

UnitedHealth stock hit a 52-week low of $ 215.82 during the session. Among other health insurers,

Cigna

(CI) declined 7.8% to $ 151.04;

anthem

(ANTM) declined 6.8% to $ 245.13

human

(HUM) fell 7.3% to $ 235.10 after hitting a new 52-week low. The managed care stocks were among the worst in the world

S&P 500

Tuesday.

“Despite a strong quarter and an increase in guidance, UnitedHealth Group stocks gave up early gains and are now selling off along with the entire MCO [managed-care organization] Names and most of the vendor stocks, ”wrote Frank Morgan, an analyst at RBC Capital Markets, in a customer announcement on Tuesday. UnitedHealth posts earnings of $ 14.50 to $ 14.75 per share in 2019, slightly higher than the previous $ 14.40 to 14.70.

“We heard nothing material negative on the UNH appeal this morning that would warrant reversing,” Morgan wrote. “We continue to believe that stocks are traded out of fear of Medicare for-all rhetoric, in a sector that has been an overcrowded favorite for many years. The sale has spread to our service provider universe under the same Medicare-For-All premise. ”

Sanders, who is running for the Democratic presidential nomination, tweeted earlier today, “Fox News was trying to prove that people like our dysfunctional, for-profit healthcare system. But they couldn’t hide the truth: the American people want Medicare for everyone. “

Managed care stocks could be under a cloud until after the 2020 elections due to the risk posed by Medicare for All, which could significantly limit or nullify the role of companies. Stocks could get a boost if the Democratic presidential candidate – or emerging front-runner this year – proves to be more moderate than Sanders and prefers to keep the current health insurance system largely intact.

Speaking on UnitedHealth’s results conference call Tuesday, CEO David Wichmann warned that Medicare for All would “destabilize the country’s healthcare system.”

Valuations for managed care stocks have fallen, with UnitedHealth now trading for 15 times projected 2019 earnings while Anthem and Humana trading for 13 times estimated 2019 earnings.

Write to Andrew Bary at [email protected]

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