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Bernie Sanders' 'Medicare for all' matters when investing in health care stocks

Brian Sozzi

“Medicare for all” champion Senator Bernie Sanders will probably take issue with the stock ideas of veteran health care policy analyst Chris Meekins of Raymond James.

Sorry, not sorry.

“I would just be cautious with the big brand pharma names. But for me, anyone that saw the decreases in managed care names [stocks] I believe they will continue to rally through the end of the year as it becomes increasingly clear that ‘Medicare for all’ is unlikely to happen,” Meekins said on Yahoo Finance’s The First Trade.

Otherwise known as insurance companies, the share prices of major “managed care” players such as UnitedHealth (UNH), Cigna (CI) and CVS Health (CVS) tanked back in late April as Sanders re-introduced his “Medicare for all” scheme. The stocks of all three have continued to underperform the Dow Jones Industrial Average and S&P 500 since April.

Under Sanders’ proposal, private health insurance would be replaced by a universal Medicare plan.

Proponents like Sanders and many other fellow Democrats see “Medicare for all” as a way to eradicate administrative waste in the bloated health care system. Obviously the aforementioned health insurers reckon such a plan would lower their profit margins, hammer their bottom lines and send their stock prices reeling.

“The wholesale disruption of American health care being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors, destabilize the nation's health system, and limit the ability of clinicians to practice medicine at their best. And the inherent cost burden would surely have a severe impact on the economy and jobs, all without fundamentally increasing access to care,” warned UnitedHealth CEO David Wichmann on the company’s first quarter earnings call in April.

Wichmann’s counterpart at Cigna, David Cordani, struck a similar tone in a May 2 interview with Yahoo Finance. But, Cordani believes his company is prepared to weather the potential “Medicare for all storm” amid a push into services.

“We are well positioned under a variety of scenarios,” Cordani said.

Meekins thinks there are other compelling opportunities for investors in the health care space besides the beat up insurers. “So I like the health care services names, the medical device names are still really good and there are a handful of biotech companies that have some really innovative technologies.”

Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi

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