Health Stocks Show Volatility From Election

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The more likely it looks that Mitt Romney will win the election, the more volatility stocks that benefited from ACA will show. Medicare-related stocks will also be vulnerable as Paul Ryan has a plan for the program.

President Obama’s dismal debate performance is a week in the rearview mirror by now, which means it’s almost time for the vice presidential candidates to square off. Undoubtedly, health care will be discussed, especially since Mitt Romney’s running mate, Paul Ryan, has a plan for Medicare.

According to the Associated Press, an analyst at Jefferies wrote in a research note that health care stocks — normally a safety net for investors because of their relative stability — will be volatile and vulnerable as a result of the vice presidential debate.

Since Romney has said he plans to repeal Obamacare — or at least parts of it — health stocks that benefited from the Supreme Court upholding the Affordable Care Act (ACA) would be negatively affected. So if Ryan trounces Vice President Joe Biden as soundly as Romney did Obama, stocks for hospitals, nursing homes and home health companies could take a dive.

The AP reported:

The overhaul's coverage expansions will significantly reduce the uninsured population treated by hospitals and other health services providers, [Jefferies analyst Brian] Tanquilut noted, adding the stocks of some of those companies have slipped as Romney made gains recently in pre-election voter polls.

Furthermore the companies with Medicare-heavy businesses will see the most volatility. Ryan’s plan for Medicare is to cap spending growth and give patients a defined contribution to assist in coverage purchases.

From June 28 — the day ACA was upheld — to Oct. 1, Tenet Healthcare was up 30%; however, the stock is showing some volatility, down 8% from Oct. 1 to Oct. 10.

Hospital chain HCA Holdings was down 1.01% on Oct. 10, the day before the VP debate.