Healthcarestocks surged on Wednesday following a strong showing by former vice president Joe Biden on Super Tuesday.
The Dow Jones Industrial Average traded 577 points higher and the S&P 500 jumped 1.8 per cent. The Nasdqaq Composite climbed 1.7 per cent.
CNBC reported that the results of Super Tuesday boosted health care stocks, resulting in The Health Care Select Sector trading more than three per cent higher. UnitedHealth jumped 10 per cent and Centene rose 12.9 per cent.
Unlike the more progressive healthcare plans championed by Senators Bernie Sanders and Elizabeth Warren, Mr Biden’s plan would reinvest in the Affordable Care Act – despite the act being partially dismantled by the Trump administration and a federal judge ruling it unconstitutional – and cap inflation on prescription drug prices.
The relief the health insurance industry seems to feel at the prospect of a Joe Biden presidency is not necessarily congruent to the feelings of the American people, however.
According to exit polls from the Super Tuesday elections, Democratic voters in the 12 states conducting exit polling all supported a “government plan for all” instead of “private insurance” when asked about healthcare.
It was no secret that investors were becoming nervous at the prospect of an Oval Office occupied by Ms Warren or Mr Sanders.
Ed Yardeni, president and chief investment strategist at Yardeni Research issued a memo expressing relief at any sign that the progressive candidates can be stopped.
“Investors fear Bernie because he wants to cut off the head of capitalism by raising taxes significantly on the rich and using the funds to provide free everything to everyone else,” Mr Yardeni said.
The “free everything” Mr Yardeni laments are programs meant to provide healthcare to all Americans free at point of service and to provide higher education at no cost.
Vox reported that Mr Biden has long been the “white knight” of the health insurance industry, as he was one of the only Democrats to never come out in support of Medicare for All.
A “top trade association” president told the news website why they liked Mr Biden.
“The industry would just like to see a candidate who would be responsible and pragmatic,” they said. “From the industry standpoint, it’s like, what was all the energy about 2010? Biden would be more sympathetic toward that.”
The healthcare industry took in record profits last year. In quarter 2 of 2019, 12 of the 16 most profitable companies were pharmaceutical companies.
According to a Kaiser Family Foundation poll, drug spending per person in the US increased from $90 to $1,025 between 1960 and 2017. More than a quarter of adults responding to the poll said they have a “somewhat” or “very” difficult time affording their treatments.
