The novel coronavirus isn’t the only event spooking investors and hammering US stocks right now. The potential nomination of Bernie Sanders to the democratic ticket has impacted health insurance stocks, with the S&P 500 managed healthcare index dropping 7% on February 24, compared to a 3.5% fall for the broader S&P 500.
Impacted companies include UnitedHealth Group, whose shares fell 7.6% and were the biggest individual drag on the Dow Jones Industrial Average, according to Reuters. Shares of Centene declined by more than 10%, while Humana saw a 6.4% drop in its shares and Anthem was off 5.6%. Shares of hospital operators were likewise hurting, with HCA Healthcare down 5.6% and Tenet Healthcare falling 4.6%.
Sanders, whose agenda includes a national Medicare for All health plan, took the top spot in the Nevada caucuses during the weekend, which gave his bid for the Democratic presidential nomination momentum. His health plan would essentially replace private insurance for a single government-run plan that covers every American. This proposal would cost more than $30 trillion over 10 years, according to independent analyses cited by Reuters.
The fact that Sanders has taken the lead surprised many market participants.
“It wasn’t clear that it was going to be that big of a win for him,” said Sarah James, a healthcare analyst at Piper Sandler. She added that the senator “is still pushing his Medicare for All, anti-health insurer platform.”
The stocks of health insurers have seen many swings over the course of the Democratic presidential race, reacting poorly to improved poll numbers for Sanders as well as Elizabeth Warren. The coronavirus outbreak isn’t helping things, with stocks feeling pressure after the virus accelerated its spread outside of China, hitting Italy, South Korea and Iran with more confirmed cases in recent days.
“If it were to become a pandemic in the United States, that would be a significant impact to the operations for managed care,” David Heupel, healthcare analyst at Thrivent Investment Management, told Reuters.
“Obviously you would have a massive increase in ER visits,” he continued. “There’s a lot of expenditures associated with that, so this would be a pretty significant increase in cost trend. That plays directly to the managed care group.”
