Major insurance stocks including UnitedHealth Group, Cigna Group, and Elevance have fallen in the past five days. The decline has been pronounced since their closing prices last Tuesday, which was one day prior to the killing of UnitedHealthcare CEO Brian Thompson.
Shares of UnitedHealth Group have decreased almost 11%, nearly 5% today alone. Other insurance stocks have followed suit, with Cigna Group dropping almost 10% and Elevance Health decreasing about 4.3% in the past five days.
An industry in the crosshairs
The decline in stocks comes amid intense online criticism of the insurance industry as a whole, which was sparked in the wake of Thompson’s death and the Tuesday arrest of 26-year-old Luigi Mangione, who was charged with the crime. Investigators characterized Mangione as a critic of the American healthcare system, a sentiment many Americans are sympathizing with, especially on social media.
Meanwhile, a bipartisan bill introduced on Wednesday would force a divestment by health insurers and drug middlemen from their pharmacy businesses within three years. The bill was sponsored by Senators Elizabeth Warren, a Democrat, and Josh Hawley, a Republican. A companion bill will be introduced in the House by Reps. Diana Harshbarger, a Republican, and Jake Auchincloss, a Democrat.
“PBMs [pharmacy benefit managers] have manipulated the market to enrich themselves—hiking up drug costs, cheating employers, and driving small pharmacies out of business,” Senator Warren said in a statement. “My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen.”
It’s not the first time the insurance industry has faced scrutiny. Americans have long criticized insurance companies over denied claims, surprise bills, and large out-of-pocket costs, explains CNBC.
Still, Jared Holz, an equity healthcare strategist for Mizuho, told CNBC that the negative stock reaction will end up being “fairly short-lived” and he doesn’t think the insurance companies will make any material changes in response to the killing.
Michael Cherny, an analyst at Leerink Partners, also doesn’t expect much of an impact. “The latest introduction of potential legislation to restrict PBM operations and broader healthcare vertical integration is unlikely to gain traction, although it is hard to dismiss outright,” he told Reuters.