The midterm elections are over, but what do the results mean for your portfolio? Paul MacDonald, president and co-chief investment officer at Harvest ETFs, believes the midterms could be a turning point for healthcare stocks, notes Amber Kanwar, host of the In the Money with Amber Kanwar podcast.
UnitedHealth Group Inc. (UNH) is one broken healthcare story that has started fixing itself.
Among the potential catalysts:
- The selloff was industry-wide and fixable. Regulatory changes limited what insurers could screen for, and more patients than expected arrived with those conditions. Medical loss ratios spiked across managed care. Because Medicare pools are repriced every year, insurers can adjust premiums to the new reality.
- The fraud headlines looked overdone. News reports of a federal investigation hit the stock hard. Paul views the risk as extraordinarily low: As the largest integrated insurer in the US, covering about 50 million lives, UnitedHealth draws political lightning by default.
- The turnaround is showing up in results. After its CEO change, UnitedHealth posted a strong quarter and raised its forecast, yet the market gave it little credit.
- Policy risk could turn into an advantage. Paul doesn’t expect Medicare-for-all-style pressure to hurt. He thinks more insured Americans and more available treatments will outweigh any added costs on premiums.
