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5 Biggest Winners from the Obamacare Replacement Bill Pushback
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In a major setback to the Trump administration, Republicans were forced to reschedule the proposed vote on the new healthcare legislation slated to replace the Affordable Care Act. Furious negotiations in the final hours before the proposed vote failed to provide the President’s legislation with enough support, leading to the postponement.
This setback was largely an outcome of the lack of consensus among various factions of the GOP on the nuances of the new legislation. Stocks suffered because of the resulting uncertainty with particular industries facing the brunt of the losses. But the pushback has led to a scenario where some stocks could hold the edge above others, leading to a new bunch of winners in the sessions ahead.
Deadlock on Details
Tense negotiations carried over into the final moments preceding the scheduled vote as conservative and moderate sections of the Republican Party. President Trump has backed the new healthcare law despite its widely perceived shortcomings. Additionally, the legislation that has been presented to the House of Representatives represents a wide departure from the stance he had taken on the campaign trail. As a result, conservative Republicans believe that provisions of the new law do not reduce healthcare insurance costs sufficiently.
In particular, a key group of party conservatives knows as the Freedom Caucus has asked for the removal of the 10 “essential health benefits” which the Affordable Care Act mandates insurers to cover. According to the group, the new law should enable citizens to purchase less complicated plans which do not cover several conditions, such as mental illness and substance abuse.
On the other hand, more moderate sections believe that the American Healthcare Act will result in a significant number of individuals losing coverage. Such fears have been accentuated by a report from the Congressional Budget Office released on Monday. The report showed that the new healthcare law would lead to 24 million more citizens losing coverage by 2026. By next year, around 14 million individuals would no longer have insurance cover in case the new law comes into force.
Hospitals, Medicare Insurers Suffer
With the required numbers still falling short, uncertainty prevails over the passage of the bill. On Thursday, the Health Care Select Sector SPDR (XLV - Free Report) decreased 0.3% and was one of the major decliners among the S&P 500 sectors. Over the last few days, Medicaid insurers and hospital stocks have suffered greatly since they are likely to suffer the most in case the ACA is replaced with a new law.
The worst sufferers have been hospital stocks which declined immediately after Trump began his attempts to garner the numbers needed to ensure the passage of the new healthcare legislation. The likes of Tenet Healthcare Corp. (THC - Free Report) , Community Health Systems, Inc. (CYH - Free Report) suffered losses with Quorum Health Corp. declining more than 13% since Monday. Under the ACA, the sector began to get paid for several services, a scenario which is likely to reverse itself since several individuals would lose their healthcare coverage under the new law.
Also, a provision of the new legislation calls for cutting Medicaid funding by giving a block of fund to each state after which the states will be on their own, without recourse to federal funds in case of a shortfall. This will lead to a loss of business for Medicaid focused insurers such as Centene Corp. (CNC - Free Report) , WellCare Health Plans, Inc. and Molina Healthcare, Inc. (MOH - Free Report) , which have also suffered over the last few sessions.
5 Stocks Set to Gain
A pushback in no way means the end of the road for the new healthcare law. In fact, President Trump has put his weight behind the new legislation and will continue to push the passage of the bill on Friday. This is why a postponement represents a renewed attempt to gather the numbers necessary. Though Trump has stated that he is likely to leave Obamacare in place and move on to other items on his agenda in case the bill fails to gain support, it seems unlikely that Republicans will leave the ACA untouched in the future.
In such a scenario, general healthcare insurers and medical devices manufacturers are likely to emerge as clear winners. General healthcare insurers stand to gain since the requirements mandated by Obamacare will decline. Meanwhile, the medical devices sector will benefit since all taxes imposed under Obamacare will cease to be levied.
Inogen Inc. (INGN - Free Report) develops, manufactures and markets portable oxygen concentrators (POC).
OraSure Technologies, Inc. (OSUR - Free Report) is a developer, manufacturer, marketer and seller of oral fluid diagnostic products and specimen collection devices and operates on a global scale.
OraSure Technologies has a Zacks Rank #2 (Buy). Its earnings estimate for the current year has improved by 80% over the last 60 days.
Edwards Lifesciences Corp. (EW - Free Report) is the world’s leading manufacturer of tissue heart valves and repair products used to replace or repair a patient's diseased or defective heart valve.
Edwards Lifesciences has a Zacks Rank #3 (Hold).Its earnings estimate for the current year has improved by 0.2% over the last 30 days.
Aetna Inc. is a provider of healthcare, dental, pharmacy, group life, disability, and long-term care benefits.
Aetna has a Zacks Rank #3.Its earnings estimate for the current year has improved by 0.8% over the last 30 days.
Humana Inc. (HUM - Free Report) is one of the largest health care plan providers in the U.S.
Humana has a Zacks Rank #3.Its earnings estimate for the current year has improved by 1.5% over the last 60 days.
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5 Biggest Winners from the Obamacare Replacement Bill Pushback
In a major setback to the Trump administration, Republicans were forced to reschedule the proposed vote on the new healthcare legislation slated to replace the Affordable Care Act. Furious negotiations in the final hours before the proposed vote failed to provide the President’s legislation with enough support, leading to the postponement.
This setback was largely an outcome of the lack of consensus among various factions of the GOP on the nuances of the new legislation. Stocks suffered because of the resulting uncertainty with particular industries facing the brunt of the losses. But the pushback has led to a scenario where some stocks could hold the edge above others, leading to a new bunch of winners in the sessions ahead.
Deadlock on Details
Tense negotiations carried over into the final moments preceding the scheduled vote as conservative and moderate sections of the Republican Party. President Trump has backed the new healthcare law despite its widely perceived shortcomings. Additionally, the legislation that has been presented to the House of Representatives represents a wide departure from the stance he had taken on the campaign trail. As a result, conservative Republicans believe that provisions of the new law do not reduce healthcare insurance costs sufficiently.
In particular, a key group of party conservatives knows as the Freedom Caucus has asked for the removal of the 10 “essential health benefits” which the Affordable Care Act mandates insurers to cover. According to the group, the new law should enable citizens to purchase less complicated plans which do not cover several conditions, such as mental illness and substance abuse.
On the other hand, more moderate sections believe that the American Healthcare Act will result in a significant number of individuals losing coverage. Such fears have been accentuated by a report from the Congressional Budget Office released on Monday. The report showed that the new healthcare law would lead to 24 million more citizens losing coverage by 2026. By next year, around 14 million individuals would no longer have insurance cover in case the new law comes into force.
Hospitals, Medicare Insurers Suffer
With the required numbers still falling short, uncertainty prevails over the passage of the bill. On Thursday, the Health Care Select Sector SPDR (XLV - Free Report) decreased 0.3% and was one of the major decliners among the S&P 500 sectors. Over the last few days, Medicaid insurers and hospital stocks have suffered greatly since they are likely to suffer the most in case the ACA is replaced with a new law.
The worst sufferers have been hospital stocks which declined immediately after Trump began his attempts to garner the numbers needed to ensure the passage of the new healthcare legislation. The likes of Tenet Healthcare Corp. (THC - Free Report) , Community Health Systems, Inc. (CYH - Free Report) suffered losses with Quorum Health Corp. declining more than 13% since Monday. Under the ACA, the sector began to get paid for several services, a scenario which is likely to reverse itself since several individuals would lose their healthcare coverage under the new law.
Also, a provision of the new legislation calls for cutting Medicaid funding by giving a block of fund to each state after which the states will be on their own, without recourse to federal funds in case of a shortfall. This will lead to a loss of business for Medicaid focused insurers such as Centene Corp. (CNC - Free Report) , WellCare Health Plans, Inc. and Molina Healthcare, Inc. (MOH - Free Report) , which have also suffered over the last few sessions.
5 Stocks Set to Gain
A pushback in no way means the end of the road for the new healthcare law. In fact, President Trump has put his weight behind the new legislation and will continue to push the passage of the bill on Friday. This is why a postponement represents a renewed attempt to gather the numbers necessary. Though Trump has stated that he is likely to leave Obamacare in place and move on to other items on his agenda in case the bill fails to gain support, it seems unlikely that Republicans will leave the ACA untouched in the future.
In such a scenario, general healthcare insurers and medical devices manufacturers are likely to emerge as clear winners. General healthcare insurers stand to gain since the requirements mandated by Obamacare will decline. Meanwhile, the medical devices sector will benefit since all taxes imposed under Obamacare will cease to be levied.
Inogen Inc. (INGN - Free Report) develops, manufactures and markets portable oxygen concentrators (POC).
Inogen’s earnings estimate for the current year has improved by 27.1% over the last 30 days. The stock has a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
OraSure Technologies, Inc. (OSUR - Free Report) is a developer, manufacturer, marketer and seller of oral fluid diagnostic products and specimen collection devices and operates on a global scale.
OraSure Technologies has a Zacks Rank #2 (Buy). Its earnings estimate for the current year has improved by 80% over the last 60 days.
Edwards Lifesciences Corp. (EW - Free Report) is the world’s leading manufacturer of tissue heart valves and repair products used to replace or repair a patient's diseased or defective heart valve.
Edwards Lifesciences has a Zacks Rank #3 (Hold).Its earnings estimate for the current year has improved by 0.2% over the last 30 days.
Aetna Inc. is a provider of healthcare, dental, pharmacy, group life, disability, and long-term care benefits.
Aetna has a Zacks Rank #3.Its earnings estimate for the current year has improved by 0.8% over the last 30 days.
Humana Inc. (HUM - Free Report) is one of the largest health care plan providers in the U.S.
Humana has a Zacks Rank #3.Its earnings estimate for the current year has improved by 1.5% over the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>