(Bloomberg) -- The moderate policies of Democratic presidential front-runner Joe Biden -- who opposes turning Medicare into national health insurance -- should ease the stress on health insurers if he scores an early primary victory in 2020. Unfortunately for holders of health insurers such as Humana Inc., UnitedHealth Group Inc. and Centene Corp., all of which are down by 10% or more since early December, the first caucus in Iowa isn’t until next February.
Leerink analyst Ana Gupte consulted two D.C. policy specialists and says the chance of a single-payer system -- dubbed Medicare for All -- becoming a reality is zero. She viewed Medicaid expansion and Medicare Advantage buy-ins offering voluntary Medicare to Americans in their fifties as more likely.
Meanwhile a pending 5th Circuit Court decision -- oral arguments are tentatively scheduled to take place the week of July 8 -- should rule in favor of ObamaCare “with the [individual] mandate viewed as severable on empirical if not legal grounds,” Gupte wrote in a note to clients. That should lift an overhang on companies that have exposure to Medicaid and the Obamacare exchanges, such as Molina Healthcare Inc. and Centene, she said.
Gupte said she had increased conviction in stocks such as Anthem, Humana, UnitedHealth and, among hospitals, HCA Healthcare. She is not the first analyst to defend the health insurance sector, and some investors have used the sell-off as a chance to bolster their positions.
Scott Flanders, EHealth Inc’s chief executive, said earlier this month that an expansion of Medicare would likely be a boon for his company as well as insurers. UnitedHealth is leading managed care gains today as the group climbs a fourth day.
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