Whatever the result of the presidential election, it looks like divided government is a near certainty, and that’s good news for what Bloomberg’s Max Nisen calls “the health care industrial complex.”
“Big pharma and health insurers are the real winners of the 2020 election,” Nisen says in an opinion piece Thursday. “Anyone who has to interact with and pay for care in America has less to celebrate.”
Nisen notes that the stocks of health insurers and pharmaceutical firms have been soaring since Election Day as traders digest the results. Divided government means one of the biggest threats to health care profitability – namely, coordinated political action to reduce costs throughout the health care system – is looking far less likely than it did before the election, when many prognosticators were predicting a “blue wave” that would give Democrats full control in Washington.
Now, facing a Senate that is expected to be led by Mitch McConnell (R-KY), it’s unlikely that a potential Biden administration would be able to sign any major health care changes into law as the upper chamber blocks significant reforms.
Trump’s legacy: The Trump years have been very good for the health care industry, Nisen says: “There was limited change under Trump. He failed to repeal the Affordable Care Act, and executive actions aimed at reining in drug prices and increasing health-cost transparency have had little effect if they've been implemented at all. His legacy is mostly a modest jump in the number of Americans without health coverage resulting from efforts to undermine the ACA and Medicaid, a mismanaged pandemic, and a bunch of lawsuits.”
Health care profits growing: “The past few years under President Donald Trump have shown how much money the industry can make from America's health-care status quo,” Nisen writes. “Annual gross profit at the 25 most valuable health companies jumped by about $80 billion over the first three years of his term to more than $650 billion. Its profit now seems likely to expand even further for the next few years. Great for investors, if not so much for the broader population and health-care system as a whole.”
Threat neutralized: Joe Biden’s proposals include a public option for health insurance and drug-price negotiating power for Medicare, but those are probably off the table now. “There's only so much Biden could accomplish with executive action,” Nisen says. “Many of his efforts would aim to undo Trump's damage, which might even benefit health companies. He would likely take a harder line on health-care antitrust issues, but if that's the biggest problem, the sector as a whole will be delighted.”