US Health Insurance Stocks Facing Uncertainty As Presidential Debates Begin

Health Insurance Stocks
Senator Warren speaks at the first U.S. 2020 presidential election Democratic candidates debate in Miami, Florida (Photo: Reuters / Mike Segar)

Health insurance stocks in the United States had recently recovered following sharp falls earlier in the year. However, the increases may only be temporary as the stocks could be in for some beating depending on the outcome of the upcoming presidential debates.

One of the hottest topics that will be up for debate amongst the candidates will be the country's healthcare policies. The outcome of the debates and the possible platforms that would be announced could have widespread implications in the industry.

As an example, the recent announcement of US Senator Bernie Sander's support for the country's Medicare for All Program had resulted in dips in US health insurance stocks. Similar platforms unveiled during the debates could sway investor sentiments in the coming months.

The US' first presidential debate is scheduled to take place this week in Florida. Around 10 presidential candidates are set to participate in the highly anticipated event. Other debates are expected to take place in July and in the coming fall.

Most recently, Trump's stance on drug discounts and the full disclosure of hospital and consultation costs had caused uncertainty in the health insurance industry.

According to market analysts, insurance stocks will likely be the most affected amongst healthcare companies of the outcome of the debates. Trends could go both ways depending on how the public and investors perceive each candidate's platform and chances of winning.

Presidential candidates often present a variety of healthcare reform ideas. While some may present more doable and practical reforms, others actually offer more radical changes that could significantly impact how business is conducted. Some investors are wary that a government-run healthcare system could potentially eliminate the need for private insurers. However, others are confident that this scenario is unlikely to happen.

Confidence in the unlikely implementation of a government-run system boosted health insurance stocks following news that former Vice President Joe Biden was entering the race. Biden has announced more moderate healthcare reforms and the fact that he is currently leading in the polls have bolstered investor sentiments.

This year, the S&P 1500 managed care sub-index has managed to climb by 1 percent. Among the biggest insurance stock gainers are Anthem, which climbed by 20 percent, and United Health Group, which rose by 14 percent. Molina Healthcare also experienced significant gains, by as much as 25 percent.

The initial underperformance experienced in the past months has mainly been blamed on political risks more than any kind of fundamental factors. That uncertainty Is expected to continue in the coming months as the debates proceed. The fate of health insurance stocks will mainly be dependent on which candidates will come out on top and the particular reforms they represent.

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