The Only Health Insurance Stock You Can Own with Michael Ha | The Real Eisman Playbook Episode 51

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Steve Eisman (1:02)

Hey, it's Steve Eisman. So today we have a returning guest, Michael Ha, who is the Medical Insurance Analyst at Baird. Michael was here last year to talk mostly about United Healthcare and its problems, and I know I learned a tremendous amount from him. And from there, we had been on a bit of a journey in terms of the health industry, health insurance, medical insurance, pharmaceutical industry of the United States. In January, we had a guest on, Waris Bokhari, who runs a company called Claimable. And Waris is the place, his company is the place you go, where if you're denied by your health insurance company payment, he will appeal for you. And what we learned from him was that the health insurance industry denies about 15 to 17 percent of all claims, and that's one of the major reasons why they keep their profits up. And then recently, we had Mark Cuban on, who's running a company that's trying to reduce the costs of drugs in the United States. And we talked a lot with him about pharmaceutical benefit managers, PBMs. So today, Michael's back, and we're going to talk about the whole sector. This is a sector that is having wrenching problems, profitability problems, medical loss ratios going higher and higher. It feels like the industry, in some ways, is almost completely out of control, has lost control of its business. And we're going to try and figure out what opportunities there are, near term and long term. And afterwards, I'll be back to talk about some lessons learned.

Hi, this is Steve Eisman, and welcome to another episode of The Real Eisman Playbook. And today we have a returning guest, Michael Ha, who is the health care insurance analyst at Baird. Michael, welcome back.

Michael Ha (2:59)

Thank you so much. And if I may, just want to speak on behalf of your audience and say, we're all very glad your health is improving.

Steve Eisman (3:06)

Oh, thank you.

Michael Ha (3:07)

And thank you for creating what I would consider to be the best financial podcast in the world.

Steve Eisman (3:11)

Oh, that's very flattering. I really appreciate that. So just to set the stage for those of you who didn't see Michael, because we had him last year. So Michael covers companies like United Healthcare, Molina. And to say that these companies, which were once viewed as really well-run companies, long-term investments, safety plays, you know, people viewed United Healthcare as just buy it, put it away, and don't even think about it because they're just going to do great. This industry has gone through wrenching changes in the last couple of years, all to the bad. Everybody knows about Luigi Mangione killing the CEO of United Healthcare's insurance, main insurance division, their medical insurance, but this is the tradition.

Michael Ha (4:00)

Allegedly.

Steve Eisman (4:00)

Allegedly. Michael, let's start with, walk us back when things were great, and then let's bring everybody up to date about what's happened because the amount of news that's happened in your sector in the last six months and since we spoke. I mean, it's almost like it's AI. I would say after AI, this is the sector that has had the most news, but in this case, pretty much all negative.

Michael Ha (4:26)

Right, right.

Steve Eisman (4:27)

So let's go back when things were good.

Michael Ha (4:29)

When things were good. So that would be before December 2024, before the Brian Thompson situation.

Steve Eisman (4:37)

When Brian Thompson was murdered.

Michael Ha (4:38)

Right, right. Before then, I mean, you could buy United, close your eyes, and that's what a lot of investors did all around the world. I would travel to Europe and talk to investors, and they had no idea what United did, what Optum was, because they were just so powerful in terms of the earnings growth. I think their EPS kegger going back 15 years was roughly 13, 14%.