Health Insurers On The Mend 💊
Health Insurers On The Mend
Donald Trump, the epitome of “careful analysis and thorough consideration” according to his White House spokesman, just brought the stock market’s health insurers back to life. This is some story!
It all started when Trump made a campaign promise to end drug “rebates” and bring medical bills down. When you fall sick as an American, all the doctors, drugs, and drips are there for you, but to access them, you need to pay a monthly fee to a health insurer. Examples like UnitedHealth, Anthem, and Cigna, are some of the stock market’s biggest fish! They like to flex their bargaining power, ransacking pharmaceutical companies for discounts on drugs. Good for their profits, and whomever else the savings are passed down to. Bad for pharma. Confused? Don’t worry! The drug pricing system is the only thing more complicated than algebra, religion, and the rules of cricket combined!
The point is, Trump wanted to appease his voters by having the everyday Joe feel those discounts. The idea only fell through once he realized lower overall medical bills were possible if the savings were shared out by the insurer and not concentrated on drug prices alone. So, for example, if the monthly fee to an insurer was also lowered. As commander in chief, this is something he can command for seniors’ healthcare, so he’s pulled back.
The consequences for investors are night and day. Fearsome insurer predators in the market were in great health yesterday as this news came out, Cigna even breaking double-digit gains for a short period! However, some pharma stocks lower down the food chain haven’t responded so well. They’ll still be picked off by insurers over the negotiating table, so send those picks straight to the ER!