Health Insurers See Biggest Rout This Year on Warren’s Rise

(Bloomberg) -- Health insurers can’t catch a break either from the impeachment investigation in Washington or Sen. Elizabeth Warren’s rising poll numbers, both of which are helping send the stocks lower for a fifth day, their longest losing streak since the December market rout.

The S&P 500 Managed Health Care Index fell as much as 3.8% on Thursday to the lowest since April 18, when the sector saw its biggest sell-off this year as “Medicare-for-All” proposals gained traction in Congress. Centene Corp. and UnitedHealth Group Inc. declined as much as 5% and 4%, respectively.

Impeachment inquiries into President Trump, coupled with Democratic presidential hopeful Elizabeth Warren’s momentum, are seen as boosting her odds of winning the Democratic nomination, and potentially, the presidency. That would be bad news for health investors since Warren supports a single-payer system, which if enacted, would wipe out private insurance.

Polls this week showed her leading among Democratic voters New Hampshire as well as Iowa and California, and one survey found her narrowly displacing Joe Biden at the head of the Democratic pack nationally. “At this point we think Warren has crept in as the consensus front-runner,” Jefferies health-strategist Jared Holz wrote to clients.

Even if most analysts and investors see a low chance of the U.S. implementing a government-run health-care system, “the specter of a single-payer system (even though it won’t be enacted) obliterating an industry is hard to shake,” Bloomberg Intelligence analyst Brian Rye said.

Hospitals would also be among the most hit by “Medicare-for-All” policies, Rye notes. A Bloomberg Intelligence basket fell as much as 2.6%. LHC Group, Inc., which provides home-based services through nursing agencies and hospices, fell 4.9%.

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Besides political jitters, managed-care stocks have been roiled by rising medical claims, which are expected to weigh on third-quarter results. The “potent cocktail” of risk factors has sent the health insurer benchmark down 12% this year.

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