During the Obama administration, the healthcare sector was initially one of the weakest groups in anticipation of increased government intervention in healthcare. However, Obamacare turned out to be much less disruptive to the industry. In fact, it was a net benefit as more insured people meant more demand for services.
As a consequence, health insurers like UnitedHealth (NYSE: UNH) and Anthem (NYSE: ANTM) were strong performers during his tenure. Going into the 2020 election, there was some unease especially as many Democratic candidates had expressed their support for "Medicare for All". President Donald Trump's unpopularity also made it seem like anyone of the nominees had a decent chance of beating him based on preliminary polling.
The industry breathed a sigh of relief when it became clear that former Vice-President Joe Biden would win the nomination as he was much more moderate in his stance and dismissive of Medicare for All. The election results in November was another positive catalyst for the sector.
Rejection of the Left
While the major headline from the election was Joe Biden's victory over President Trump. The undercard was defined by Republicans outperforming massively against expectations to win House seats and most likely hold onto their Senate majority given that they are favored to win both runoff elections.
The fact that many voters chose Biden at the top of the ticket and Republicans down-ballot is a sign that voters were eager to dismiss President Trump but not in favor of the Democrats' agenda. Notably, the biggest movements towards Republicans happened among Hispanic voters who voted Republican for President and Congress. Many, voters in the suburbs split their ticket with Biden at the top but choosing Republicans for Congressional seats.
For the healthcare sector, it's a positive sign that there will be no major, disruptive change to the industry like controls on drug-pricing or a "public option". Instead, the status quo will reign as gridlock in Congress will make it difficult to accomplish anything substantial.
Investors should certainly consider healthcare stocks as an investment. The long-term demand for healthcare will continue to rise given the aging population and higher than average rate of inflation in the sector. Further, the coronavirus resulted in many procedures being delayed which should lead to higher than average sales in the coming quarters.