Investors are understandably nervous about Sanders’s proposal. It would establish a single healthcare plan, funded by taxpayer dollars and operated by the government. Opportunities for private health insurers would either shrink or disappear under this setup. Worryingly, too, the Vermont senator’s co-sponsors include four of his fellow candidates for the 2020 Democratic presidential nomination.
Notwithstanding these valid concerns, the healthcare selloff may well prove to be just a temporary headache. Single-payer health insurance is not a new idea and the Democratic presidential contenders have not unanimously lined up behind it. Front-runner Joe Biden instead promises to defend and build on ObamaCare, officially known as the Affordable Care Act (ACA). He may ultimately cave in to pressure from his party’s progressive wing as time goes on, but that would not automatically spell doom for health insurers. The other Democratic candidates vary widely in their views about how sharply private insurers’ role should be cut back.
The House Rules Committee has opened hearings on a single-payer system, but House Speaker Nancy Pelosi has not committed to allowing a vote on it. Currently, she is deciding all procedural matters with an eye toward the 2020 election and therefore wants to keep a rein of the Democratic left. The election is a year-and-a-half in the future; Medicare for All may go nowhere before then.
Then there is the not-so-minor detail of defeating an incumbent Republican president. Moreover, a victorious Democratic nominee would need big coattails to make Medicare for All a reality. Without taking control of the Senate, Democrats would have little or no chance of overhauling the healthcare system.
The Health Care Select Sector SPDR ETF (XLV) fell $0.72 (-0.80%) in after-hours trading Thursday. Year-to-date, XLV has gained 8.60%, versus a 9.55% rise in the benchmark S&P 500 index during the same period.
XLV currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 34 ETFs in the Health & Biotech ETFs category.
This article is brought to you courtesy of Forbes.
