Dec 7, 2019 - Health

Health care profits are soaring

Illustration of a man sitting at a table covered in healthcare bills

Illustration: Sarah Grillo/Axios

Soaring health care costs are bad news for patients and taxpayers, but great news for the very profitable health care industry.

The big picture: The sector has profited heavily in 2019. Expect more of the same in 2020.

  • Most health care companies are immune from the trade war, and Washington isn't about to impose any cost controls. And the industry will continue to benefit from the GOP tax cuts.

Hospitals' rush to issue new debt signals they will find ways to fill beds

Pharmaceutical companies will keep hiking the prices for popular treatments and fighting off cheaper competitors.

Insurers are benefiting from the rising popularity of private Medicare Advantage plans.

  • UnitedHealth, the largest health insurance company by revenue, just forecasted a very profitable 2020, in line with Wall Street's estimates.

Pharmacy benefit managers have faced challenges to their business models in states, but the biggest ones have insulated themselves by merging with insurance companies.

What to watch: Speaking of health care mergers, expect more of them, even after the spate of blockbuster deals over the past few years.

The bottom line: The health care industry's biggest threat is a Democratic administration focused on health care, but that's a long way away.

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