- Major managed care companies' stocks rebounded in trading Wednesday following former Vice President Joe Biden's strong showing on Super Tuesday, allaying fears of systemic upheaval from Sen. Bernie Sanders' "Medicare for All" plan.
- Payers see Medicare for All as an existential threat. The controversial healthcare proposal from Sanders, D-Vt., would essentially eliminate the private insurance sector.
- Anthem was up almost 14% after initial market open; Centene was up almost 13%; UnitedHealth Group and Cigna were up roughly 11%; and CVS Health was up almost 6%. An exceptional Super Tuesday for Sanders was seen likely to drag down the managed care sector.
Tuesday was the most impactful day in the Democrat primary thus far, as one-third of all total delegates are rewarded based on the results. As of late Wednesday morning, with about half of the delegates awarded from the night, Biden had captured 351 of the 1,338 total up for grabs, followed by Sanders at 280.
Though votes are still being tallied, Biden is confirmed to win Alabama, Arkansas, Massachusetts, Minnesota, North Carolina, Oklahoma, Tennessee, Texas and Virginia, and strongly forecast to win Maine.
Sanders, by comparison, is very likely to net California — a major prize with 415 total delegates — and confirmed to win Colorado, Utah and Vermont, according to National Election Pool data from Edison Research.
The longtime senator's healthcare plan goes significantly further than other progressive proposals to expand the public option or create a Medicare or Medicaid buy-in. UnitedHealth CEO David Wichmann has said Medicare for All would create "wholesale disruption" of America's health system.
Biden, by comparison, endorses a public option and bolstering the Affordable Care Act. His gains Tuesday make the odds Sanders lands in the country's top office a little longer, easing ongoing Wall Street concerns over a major regulatory overhaul.
Market volatility is not unusual in an election year, particularly in the healthcare sector. But the managed care market correction Wednesday comes following a notable slump year to date as Sanders surged ahead in the polls, popular moderate candidates South Bend, Indiana, Mayor Pete Buttigieg and Sen. Amy Klobuchar, D-Minn., dropped out of the race and a novel coronavirus outbreak threatens to put more stress on the industry.
Moving to some form of a nationalized healthcare system could erode profit margins across the industry — especially for payers. Cost estimates for the plans deviate in the tens of trillions, from Sanders' $33 trillion to $52 trillion for Sen. Elizabeth Warren, D-Mass. As of publication, Warren has not finished above third place in a single Super Tuesday state, including Massachusetts.
The Trump administration and other small-government critics have slammed the plan as socialism. Liberal supporters of Medicare for All say, over time, it will lower costs for everyone, despite hiking federal spending.
But Tuesday's showing suggests the Democrat party may be more middle-of-the-road than expected: Only 42% of primary voters said they wanted to replace all private insurance with a single government plan, and 49% opposed the idea, according to exit polling reviewed by the Washington Post.
For-profit hospital operators, another group that could be dinged under a nationalized insurance plan through lower reimbursements, also saw share gains Wednesday morning, with HCA up more than 6%; UHS up more than 4%; Community Health Systems up more than 5%; and Tenet up almost 9%.