The political situation in the US poses a danger to the current Health Care stocks in the market. This threat to the health care stocks became prominent when the Medicare for All Act was proposed by Sen. Bernie Sanders, who has gained ground in the Democratic Presidential Race.
According to the Wall Street poll, Sanders and former Vice President Joe Biden share the same position closely followed by Sen. Elizabeth Warren. However, the investors in the health care companies are being advised not to panic. Let us see why.
What Is the Medicare for All Act?
Sen. Bernie Sander feels highly concerned that even in 2020, around 300 million Americans don’t have health insurance, and hence he proposed the Act. It is a comprehensive attempt to provide a single person in America free health care service.
This also covers dental, vision, hearing, etc. which means no more insurance premiums or payments for health care. And this bill is supposed to reduce medical inequality, avoid medical bankruptcy, and more importantly, reduce cost.
What Is the Current Law?
The current law of the health care policy is called the Affordable Care Act, also known as Obamacare. This bill was signed is 2010 and provides an extension of insurance to millions of uninsured Americans.
And the companies in the health care industry find this policy very favorable and have benefited from it, as that sector has had the highest revenues and growth over the last few years.
Why Should Investors Not Panic?
This law is likely to pose a huge threat to corporations in the health care industries. Just the proposal of the Act lowered the stock prices by 2% the following day. However, it is being advised by the experts that investors should not react to this for the following reasons.
- The investors should not react to Iowa Caucus so much because more important polls are coming.
- Even though the results are similar to this poll, it will take time for the Act to become a law, and there is no concrete guarantee that it will.
- And even if it does manage to pass as a law, the insurance companies and the drug manufacturers will not go down without a fight.
- The position of the health care company is very strong in the market. The industry itself has performed outstandingly over the last few years. So even if there is a crash in the market, people should put their money on a quick recovery.
Sen. Bernie Sanders has targeted health care because it is a big part of the US budget as health care spending takes up almost 18% of their GDP. If you take a look at the past, you will see there were countless promises that numerous politicians proposed but failed to accomplish.
So, it is highly recommended for the investors to keep their cool during these announcements and proposals because nothing has legitimately happened yet.