April 16, 2019, 5:38 PM CDT Updated on April
17, 2019, 1:32 PM CDT
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.
The rout has started to bleed into the broader space, hitting
medical devices, biotech and pharmaceutical shares. The S&P 500 Health Care
Equipment Index plunged 4.3 percent, the most since February, while the Nasdaq
Biotech Index fell 4.5 percent. Among drugmakers, Allergan Plc declined 5.4 percent,
Pfizer Inc. was down 3.6 percent and Merck & Co. fell 4 percent.
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.
As a source of coverage, UnitedHealth is almost as large as
Medicare itself. It provides health-insurance services to 49.7 million people,
and last year recorded revenue of $226.2 billion. Along with insurance, it
operates physician practices, sells consulting and data services, and
administers drug benefits. It also covers millions of people in private-sector
versions of Medicare and Medicaid.
While UnitedHealth had kept a low profile, there are signs it was
already becoming a target before Wichmann’s remarks Tuesday.
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.”
Our message to Steve
Nelson and UnitedHealthcare is simple: When we are in the White House your
greed is going to end. We will end the disgrace of millions of people being
denied health care while a single company earns $226 billion and its CEO makes
$7.5 million in compensation.
Sanders specifically referenced Steve Nelson, who is chief
executive of UnitedHealthcare, the company’s insurance division. Sanders cited
a Washington Post story about remarks Nelson made at a company meeting.
According to the Post, Nelson answered a question from an employee
about the insurer’s role in the political discussion, saying, “the last thing
you want to do is become the poster child during the presidential campaign.”
A spokesman for the company said UnitedHealth has long supported
the expansion of health-care coverage.
— With assistance by Tatiana Darie
(Updates with rout affecting other segments in sixth paragraph. An
earlier version of this story corrected the name of Community Health Systems.)
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