2020 Democratic presidential candidate U.S. Sen. Bernie Sanders (I-VT) speaks during a rally at the Iowa State Fairgrounds on March 9, 2019 in Des Moines, Iowa.

Once panned by Wall Street as a socialist with "crazy" ideas, Sen. Bernie Sanders is finally commanding attention from investors.

And they don't like what they see.

Shares of the nation's leading health insurance companies sank Monday after a handful of new polling data showed the Vermont Independent had eclipsed longtime front-runner Joe Biden among Iowans one week before the state's key Democratic caucuses.

Stocks including Anthem, UnitedHealth and Cigna all fell at least 2% in early trading. Molina Healthcare, an $8 billion health insurance company based in Long Beach, California, dropped 3.1%.

"There was a battle between Sanders and Warren on who would be the progressive candidate. And Sanders appears to have won that battle," said Thomas Block of Fundstrat Global Advisors. But "people I've talked to continue to not take Bernie that seriously."

"A big win in Iowa could change that," Block added.

An Iowa victory could trigger what Wall Street "Bond King" Jeffrey Gundlach labeled a Sanders "scare," warning investors earlier this month that the biggest risk to the markets in 2020 is the Vermont senator becoming "more believed in as a real force" that investors would have to take more seriously.

"Bernie is stronger than people think," the DoubleLine CEO said on Jan. 7. "I think it will be taken more seriously as the field winnows. The financial markets broadly will have to deal with the fact that there could be a scare that Bernie Sanders is starting to become a plausible candidate for the nomination."

To anyone who's opened a newspaper in the past 12 months, the fact that health-care stocks would fall whenever Sanders sees his support rise may not seem revolutionary. His avowed opposition to private-sector health care — and what he views as excessive profiteering in general — isn't new.

Sanders election odds vs. health-care stocks

The blue line is Sanders' odds to win the Democratic nomination via PredictIt.org. The red line is the Health Care Select Sector SPDR ETF vs. the S&P 500 (relative performance of health-care stocks).

Source: Jefferies analyst Jared Holz

"If we are going to break the stranglehold of corporate interests over the health care needs of the American people, we have got to confront a Washington culture that has let this go on for far too long," Sanders said in July. "That is why I am calling on every Democratic candidate in this election to join us in rejecting money from the insurance and drug industries."

His yearslong crusade against private health insurance and support for "Medicare for All" was a central pillar of his 2016 campaign as well.

Sanders tweet

What has changed, however, is the way Wall Street is viewing his odds.

The results of a New York Times/Siena College poll released over the weekend showed his support among Iowa voters swelled by 6 points since their last survey in late October, putting Sanders well above rivals such as fellow progressive Sen. Elizabeth Warren and Biden.

Meanwhile, online betting market PredictIt shows Sanders' odds of clinching the Democratic nomination at 40%, 6 percentage points above No. 2 Biden.

Nate Silver's FiveThirtyEight puts Biden's odds of winning the nomination at 2 in 5 (42%) and Sanders' at 3 in 10 (28%). But even that represents a big bounce for Sanders, who earlier this month saw his odds on FiveThirtyEight at less than 20%.

Investors have for nearly two full election cycles dismissed the self-described democratic socialist as little more than a progressive to pull otherwise centrist Democrats further to the left. He was more an interesting thought experiment and testament to the consequences of income inequality than an actual threat for the White House.

The flurry of polling headlines appeared to be enough to convince traders that they should start to account for his chances, however remote.

That can explain two important developments: Why Sanders' proposals to overhaul the American health-care system haven't fazed Wall Street until now and why health-care stocks rallied during the last three months of 2019 as Warren's support waned.