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Health care investors are in denial about their risks

Health care stocks in the Russell 3000 index of the largest U.S. companies are outperforming the index as a whole since the election. A few stocks with ACA exposure are down since the election, but many more are up.

By Max Nisen | Updated on June 16, 2017
Health care stocks in the Russell 3000 index of the largest U.S. companies are outperforming the index as a whole since the election. A few stocks with ACA exposure are down since the election, but many more are up. (Photo: Shutterstock)

The U.S. health care system is full of things that don’t make much sense. A lot of them are extremely profitable. 

One of these, recently highlighted by legendary short-seller Jim Chanos, is dialysis, a market largely split in the U.S. between two large firms, DaVita Inc. and Fresenius Medical Care AG & Co KGaA. If the Senate passes a health care bill similar to one the House of Representatives passed last month, then it may become easier for private insurance plans to stop covering dialysis, cutting off a big source of profit for these companies.

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