Plan Advisors Blog

Don't Fear Health Care Stocks Volatility

Posted by Lance Hoeltke on Thu, Apr 25, 2019 @ 11:47 AM

You’re enjoying your morning cup of coffee or tea and watching the market open. Then the health sector falls 4%, the lowest reading since December 2018. Why is this happening? Earnings weren’t released, nor have there been any changes to the current system.

The simple answer is the stock market’s emotional. It is reacting to some aspirational policy ideas that are gaining support, and investors believe could hinder corporate profits.

Bernie Sanders, MFA (Medicare for all) was the latest headwind. Investors are under the assumption that health care revenue could be squeezed if the federal government is the country’s “single payer”. Unfortunately, the market is reacting as if new legislation has already passed. This negative reaction reflects investor perception of the long-term political risks.

With estimated MFA costs of 100 trillion dollars along with wiping out a health care system currently representing 18% of the national economy, there is a very small chance this would ever occur.

In summary, you could say the health care sector is too big to fail. Keep in mind until all the noise settles, but be prepared for the roller coaster to keep moving.

More insights on Medicare for All coming soon!

Tags: selling Medicare Advantage Plans, medicare, insurance, Medicare Health Plans, Medicare Advantage, Medicare options