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StockBeat - UnitedHealth Tumbles After CEO Sounds Alarm on Medicare for All

Investing.com - UnitedHealth fell Tuesday, giving up early post-earnings gains as political concerns overshadowed solid results.

Among Democratic presidential hopefuls, "healthcare for all" has proved a popular narrative. Proponents of a universal Medicare plan, where people could be guaranteed coverage without using private insurance, argue that a government-led measure would iron out the administrative creases currently bedeviling the U.S. health care system. But UnitedHealth Group CEO David Wichmann warned that a Medicare for All system would destabilize the health care system and ultimately fail to expand access to care.

The measures proposed by Democrats 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," Wichmann said. "And the inherent cost burden would surely have a severe impact on the economy and jobs -- all without fundamentally increasing access to care."

Wichmann's remarks served as a reminder that health care will likely continue to remain a focal point and stocks will be vulnerable to negative headline risk as the 2020 presidential race heats up. In recent weeks, the sector has been pressured as lawmakers considered plans to curb drug prices.

UnitedHealth (NYSE:UNH) fell 5.6% even as the company delivered above-consensus earnings and raised its 2019 earnings per share guidance to $14.50 to $14.75 from $14.40 to $14.70. The earnings beat and raise led to some bullish calls from analysts on Wall Street.

But UnitedHealth's shares hit a 52-week low after the Wichmann comments and subtracted more than 80 points from the Dow Jones Industrial Average. The shares are off more than 12% this year.

"We think UNH's strong growth in Q1 demonstrates its value to stakeholders across the health care system, and reinforces our view that any future reforms will still allow UNH to continue making its customers happy," CFRA said in a note.

Other healthcare insurers including Community Health (NYSE:CYH), Humana (NYSE:HUM) and Molina Healthcare (NYSE:MOH) also slumped, leaving the wider healthcare sector nursing a 1% loss.

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