Health insurers sink as `Medicare for all' idea gains traction

Health insurers are leading declines among healthcare stocks as investors turned their focus to Democrats’ new “Medicare for all” bill that would replace almost all private plans and assessed the implications of a Senate hearing on surging drug prices.

The S&P 500 Managed Health Care Index plunged as much as 4.9%, the most since Dec. 6, led by UnitedHealth Group, Humana and WellCare Health Plans. The broader health sector index fell 0.8%.

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The U.S. Capitol stands before sunrise in Washington, D.C., U.S., on Friday, Oct. 20, 2017. President Donald Trump's top legislative priority took a major step forward as the Senate narrowly approved a budget vehicle for tax cuts -- but sharp divides over an array of non-binding amendments revealed the towering challenge he faces from here. Photographer: Bloomberg/Bloomberg

“This doesn’t have a prayer of being enacted anytime soon,” said Bloomberg Intelligence policy analyst Brian Rye. “But the noise factor is there, and you can bet multiple Democratic candidates will hop on board and push this in the debates starting in June.”

Some weakness may be related to a highly-anticipated drug pricing hearing in the Senate on Tuesday, where major drugmakers again pointed to drug-plan middlemen for clouding the true price of prescription drugs. Democratic Senator Ron Wyden of Oregon suggested PBMs and health insurers would have their turn before the panel.

Insurers UnitedHealth and Cigna, which also own the country’s largest pharmacy benefit managers, were both down about 4%. CVS Health, which also owns a PBM and managed-care company Aetna, fell 2%.