Donald Trump vs. Hillary Clinton: The Future of Obamacare

If crowdsourcing is any indication, sentiment on health care stocks is bearish, no matter who wins the presidency.

As part of an attempt to democratize investor opinions about the stock market, a New York company called CrowdInvest launched the CrowdInvest Wisdom exchange-traded fund (ticker: WIZE) in April. Mobile app users express bullish or bearish opinions on U.S.-traded stocks, and those votes determine which equities are included in the CrowdInvest Wisdom index, which the ETF tracks.

Participants voted for health care stocks to make up 17.8 percent of the index during the month when the ETF launched, but now they are saying they want only 8 percent, says Martin Mickus, chairman and founder of CrowdInvest. That compares with about 15 percent for the broad Standard & Poor’s 500 index.

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Mickus says users are expressing worries for drug companies ahead of the presidential election in November, which will be the first since Americans have been required to have health insurance under the Affordable Care Act, or Obamacare.

Implications for drug makers. The stocks of prescription drug companies such as Pfizer (PFE) and Merck & Co. (MRK) may not fare particularly well under either Republican Donald Trump or Democrat Hillary Clinton, as both camps say there isn’t enough competition and that drugs cost too much, says Joe Ellis, senior vice president with Pennsylvania financial services company CBIZ Benefits and Insurance Services.

Both candidates support importing drugs from other countries to lower costs. Such a move would bring more competitive pressure on the drug companies, Ellis says.

Additionally, Ellis sees a likelihood that the prohibition on the federal government negotiating drug prices with companies being lifted in a Trump presidency. It’s less likely with a Clinton administration, but she would at least face some pressure to do so, he says.

Such a move could open up competitive bidding for government contracts like Medicare, which could pressure prices.

Mickus says investors are fearing fewer customers for drug companies such as Amgen (AMGN), Celgene Corp. (CELG) and AbbVie (ABBV) under a win by Trump, who has called for repealing Obamacare.

“The drug companies could end up being the loser under either administration,” says Joe Heider, founder and president at Cleveland, Ohio-headquartered Cirrus Wealth Management.

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Insurance companies and Obamacare. “It’s been a great ride for the insurance companies,” Ellis says, noting companies such as Cigna Corp. (CI), UnitedHealth Group (UNH), Anthem (ANTM) and Humana (HUM) have had significant growth in their shares because of an influx of customers since 2010, when Obama signed the Affordable Care Act into law.

But even though insurance companies stock prices have risen, their profits have been under pressure as they have had to insure sicker patients, Ellis says.

If Clinton is elected and Congress remains in the hands of Republicans, Heider expects very little changes with Obamacare. Even though Republicans will continue to try to get rid of Obama’s health care law, Heider doesn’t think they will be successful.

However, if Clinton wins and she gets more Democratic support in Congress, Obamacare may be expanded to try to get those still uninsured on board, he says. That would mean more customers for insurance companies, but they might also get sicker people, he says.

Heider says that would be a net gain for insurance companies and their stocks would rise.

Trump, however, is more of an unknown because while he has said he wants to repeal Obamacare, he also has said he supports universal health care. “It’s almost a crapshoot,” Heider says.

Even if Trump wins and Republicans remain in charge of the Senate and House, Heider doesn’t see Obamacare being totally eliminated because millions are now signed up under the program and it would be a political disaster to kick them out.

Ellis also says a total repeal is unlikely, but says Trump could have some success in getting rid of the mandate that everyone have insurance and that employers with more than 50 full-time workers have to offer insurance or face a penalty.

That could open up the doors to less expensive coverage that wouldn’t currently meet Obamacare rules, which might bring in new insurance buyers who are currently healthy but sitting on the sidelines, he says. That would boost the profitability of insurance companies with new customers as well as fewer payouts.

If Trump becomes president, the stock market in general and health care stocks in particular will become more volatile, Heider says. People supporting Trump favor him as a change agent, he says.

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“Wall Street does not like uncertainty,” Heider says.

Top-Performing Managed Health Care Stocks

Stock	Price	1-Year Return
Wellcare Health Plans Inc WCG	$105.19	17.18%
Unitedhealth Group Inc UNH	$137.26	14.67%
Triple-S Management Corp GTS	$24.71	1.69%
Aetna Inc AET	$119.92	3.24%
Humana Inc HUM	$185.55	6.46%
Magellan Health Inc MGLN	$64.07	6.67%
Anthem Inc ANTX	$44.46	11.62%
Centene Corp CNC	$67.01	15.41%
Cigna Corp CI	$126.56	17.78%
Anthem Inc ANTM	$130.61	20.19%