{"id":308,"date":"2019-04-23T10:54:07","date_gmt":"2019-04-23T07:54:07","guid":{"rendered":"https:\/\/roboforex.com\/blog\/?p=308"},"modified":"2023-06-23T10:05:55","modified_gmt":"2023-06-23T07:05:55","slug":"healthcare-sector-down-after-news-on-another-reform","status":"publish","type":"post","link":"https:\/\/roboforex.com\/blog\/2019\/04\/23\/healthcare-sector-down-after-news-on-another-reform\/","title":{"rendered":"Healthcare Sector Down after News on Another Reform"},"content":{"rendered":"\n

The US will be electing president in 2020, but\nthe candidates-to-be are already talking actively, if not aggressively; one of\nsuch speeches tore down the entire sector.<\/p>\n\n\n\n

<\/span>Attitudes towards health insurance in USA<\/span><\/h2>\n\n\n\n
\"US<\/a><\/figure>\n\n\n\n

The healthcare is likely to become the sector\nin question the election campaigns will be based upon. What then happened and\nwhy does it need any reforms, shortly after Barak Obama had already run them?<\/p>\n\n\n\n

The US is a country where people work a lot in\norder<\/a> to make their dreams come true. If you fall ill before you start earning\na fair amount of money, though, you may get into trouble; not all are able to\nget rid of debts after getting sick.<\/p>\n\n\n\n

Before Obama's reforms, health insurance was\nnot compulsory, and those with low income were not that willing to get that\ninsurance. When they finally changed their mind, the insurance providers often\nrefused to provide them with the insurance policy, which could turn the entire\nlife of a person into a big trouble. Without insurance, you can't get into a\nhospital, but at the same time you can't get the insurance, as you are already\nill, and perhaps severely so. With no social coverage either, such a person can\neither leave the US and try to get treatment elsewhere, or just hope for the\nbetter, waiting for the disease to get cured by magic.<\/p>\n\n\n\n

Middle class people can afford a good insurance\nand nice medical service, but that's not enough, as some policies cover just\nbasic things. If a serious or complicated disease has been diagnosed, you can\nonly be saved with an all-inclusive insurance, which is accessible to rich\nfolks only.<\/p>\n\n\n\n

This was so much of a problem even back in the\n90s, when Bill Clinton attempted to run a reform, but failed to do so. By the\ntime Obama became president, 47M people out of 300M in the US had no health\ninsurance, while 50M had only the minimum coverage, with the insurance price\ngetting up by four times from 2000 to 2008.<\/p>\n\n\n\n

<\/span>Whats wrong with the US healthcare system?<\/span><\/h2>\n\n\n\n

The US healthcare system is decentralized,\nwhich boosted the number of middlemen and, subsequently, the insurance price,\nwhile the drug prices are not regulated by anyone. The service cost per patient\nin the US is a few times higher than in many other countries, while the quality\nis identical or even worse. The exact cost is unknown because of too many\nintermediary service providers, but the point is the end-customer is the one\nwho bears<\/a> all those costs.<\/p>\n\n\n\n

Meanwhile, the pharma companies increase drug\nprices to earn billions of dollars out of it, and the healthcare sector\nemployees have lobbies in the government, which prevents the president from\nrunning a comprehensive reform.<\/p>\n\n\n\n

Thus, all Obama could do was introducing\ncompulsory medical insurance and supporting economically disadvantaged and\nretired people. This was good both for the insurance companies, where the\nnumber of clients increased, and for the physicians that got more paid work to\ndo, while the pharma did not suffer at all. Trump, however, did not like this\noverall positive reform and said he was going to replace Obamacare with his own\none. He was still unable to develop a viable alternative option and ended up\nchanging a few things in the existing system, thus making life of people over\n50 a bit tougher.<\/p>\n\n\n\n

<\/span>Pressure on the UnitedHealth Group<\/span><\/h2>\n\n\n\n

Now, quite unexpectedly, Bernie Sanders comes\nin with his own project. He suggests abolishing the compulsory insurance, with\nthe government paying all patients' costs. The government is also supposed to\ndetermine the prices for all medical services. <\/p>\n\n\n\n

In order to make this work, Sanders says, one\nhas only to increase taxes. This resembles very much the socialist fair money\nallocation concept, although socialism is much criticized in the US.<\/p>\n\n\n\n

Sanders' words hit UnitedHealth Group (NYSE<\/a>: UNH)<\/strong>, the top US medical insurance company, badly, the latter losing around $30B in market cap in just a few days.<\/p>\n\n\n\n

\"UnitedHealth<\/a><\/figure>\n\n\n\n

Technically, the stock may go down to reach\n$180, even though the recent earnings report beat the expectations.<\/p>\n\n\n\n

\"UnitedHealth<\/a><\/figure>\n\n\n\n

<\/span>Market reaction<\/span><\/h2>\n\n\n\n

With the possible drug regulation coming in, the pharmaceutical companies followed their insurance counterparts; thus, Pfizer<\/a> (NYSE: PFE)<\/strong> lost 6.84% over a week, Merck&Company (NYSE: MRK) <\/strong>plunged by 8.33%, while Eli lilly and Company<\/a> (NYSE: LLY)<\/strong> got down by 7.95%.<\/p>\n\n\n\n

\"Pfizer<\/a><\/figure>\n\n\n\n

Overall, the healthcare sector had lost 5.50%\nby the end of the week.<\/p>\n\n\n\n

\"stocks<\/a><\/figure>\n\n\n\n

The investors might have been too much in a\nhurry, as no laws or regulations have been passed yet. In order to get it all\nwork, Sanders will have to win the elections first, and the earliest that could\nhappen is in late 2020. Besides, even if this is the case, Sanders will have to\nface the battle against the pharma and insurance companies. Both Obama and\nTrump already tried to introduce something similar, but both failed just\nbecause the big business is still here to stay. This way, what Sanders is\nsaying now is just talk, and he is only probably doing it in order to have\nsomething to base his election campaign upon.<\/p>\n\n\n\n

<\/span>Conclusions<\/span><\/h2>\n\n\n\n

Nothing is yet for sure. When the stocks<\/a> went\ndown, the volume increased, which means the investors are still interested in\nthose companies; moreover, the quarterly earnings are quite fine. On the other\nhand, however, the companies are likely to be under pressure right until the\nelections are over, and few are those who can tolerate such a strong and long term\nrisk.<\/p>\n\n\n\n

The S&P500<\/a><\/strong> is near its highs and needs a correction, while the market needs precise information on who is going to be the next president.<\/p>\n\n\n\n

\"S&P500<\/a><\/figure>\n\n\n\n

The healthcare sector is thus likely to stick\nto the negative scenario, which means the prices will be getting better for\nbuying in the future.<\/p>\n\n\n\n

\nOpen Trading Account<\/a><\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

The US will be electing president in 2020, but the candidates-to-be are already talking actively, if not aggressively; one of such speeches tore down the entire sector.<\/p>\n","protected":false},"author":22,"featured_media":540,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[102,33],"class_list":["post-308","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-healthcare-sector","tag-pfizer-inc"],"yoast_head":"\nHealthcare Sector Down after News on Another Reform - RoboForex Blog<\/title>\n<meta name=\"description\" content=\"The US will be electing president in 2020, but the candidates-to-be are already talking actively, if not aggressively; one of such speeches tore down the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/roboforex.com\/blog\/2019\/04\/23\/healthcare-sector-down-after-news-on-another-reform\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Healthcare Sector Down after News on Another Reform - RoboForex Blog\" \/>\n<meta property=\"og:description\" content=\"The US will be electing president in 2020, but the candidates-to-be are already talking actively, if not aggressively; 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