UnitedHealth Group shares keep falling, other health insurance stocks follow, as criticism of the industry heats up

Major insurance stocks including UnitedHealth Group, Ciga Group, and Elevance have fallen up to 11% in the last five days. The decline has been pronounced since their closing prices last Tuesday, which was one day prior to the killing of UnitedHealthcare CEO Brain Thompson.

Shares of parent company UnitedHealth Group have declined about 11% in the last five days and have decreased almost 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 that 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 representatives 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,” 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 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.