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Yesterday, President Donald Trump’s efforts to repeal Obamacare (Affordable Care Act, or ACA) and replace it with the American Health Care Act (AHCA) or Trumpcare (as it is often referred to) got a boost with the House of Representatives voting to repeal Obamacare.
The vote comes after a setback earlier this year in March when the healthcare bill was not put to vote due to lack of enough support with opposition from both conservative and moderate lawmakers.
Yesterday, the House voted narrowly in favor of the AHCA which was presented with a few changes aimed at winning over some of the more conservative lawmakers.
Some of the key points in AHCA are age-based tax credits, funding cuts to programs like Medicaid, allowing states to seek waivers from Obamacare regulations, removing several of Obamacare’s requirements on employers and insurance companies, elimination of the individual mandate, defunding Planned Parenthood, removing the “Cadillac” tax, and repealing the medical device tax. The amendment also provides $8 billion incremental funding for those with pre-existing conditions in States which chose to opt out with waivers.
The House vote came before the Congressional Budget Office (CBO) could issue a report regarding the implications on cost under the revised bill. In Mar 2017, the CBO had said that enacting the AHCA would cut federal deficits by $337 billion over the coming decade but the number of uninsured people would go up by 24 million in 2026 relative to Obamacare.
How Will the Senate Vote Go?
The next step for the bill is to go to the Senate for voting so it can be passed into law. However, with the House coming under fire for voting on the bill before the issuance of a CBO report, the Senate will most likely wait for the latest CBO report on expected costs and impact of the bill before it votes on the same. Moreover, the general opinion is that the bill will not be passed in its current state and the Senate may well come out with its own version. Getting the Senate to vote in favor may well prove to be an uphill task especially considering the Republicans can afford to lose only two votes for the bill to go through.
But hospital stocks like Tenet Healthcare Corp. (THC - Free Report) , HCA Holdings, Inc. (HCA - Free Report) , LifePoint Health, Inc. , and Community Health Systems, Inc. (CYH - Free Report) will all be under pressure if Obamacare gets replaced. This is because hospitals benefited under Obamacare with more than 20 million people gaining coverage. However, Trumpcare is expected to result in an increase in uninsured people which is not good news for hospitals. Companies with a high exposure to Medicaid will also be under pressure. So far in 2017, the Zacks-categorized Medical-Hospitals industry has performed better than the S&P 500 with the industry gaining 14.1%.
The bottom-line is that Trumpcare still has a long way to go before it becomes law. Several aspects of the bill have come under criticism including the possibility of millions of people losing coverage and weaker coverage for those with pre-existing conditions. So watch out for volatility in this segment of the healthcare market in the near-term.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Trumpcare Gets House Support: What Next?
Yesterday, President Donald Trump’s efforts to repeal Obamacare (Affordable Care Act, or ACA) and replace it with the American Health Care Act (AHCA) or Trumpcare (as it is often referred to) got a boost with the House of Representatives voting to repeal Obamacare.
The vote comes after a setback earlier this year in March when the healthcare bill was not put to vote due to lack of enough support with opposition from both conservative and moderate lawmakers.
Yesterday, the House voted narrowly in favor of the AHCA which was presented with a few changes aimed at winning over some of the more conservative lawmakers.
Some of the key points in AHCA are age-based tax credits, funding cuts to programs like Medicaid, allowing states to seek waivers from Obamacare regulations, removing several of Obamacare’s requirements on employers and insurance companies, elimination of the individual mandate, defunding Planned Parenthood, removing the “Cadillac” tax, and repealing the medical device tax. The amendment also provides $8 billion incremental funding for those with pre-existing conditions in States which chose to opt out with waivers.
The House vote came before the Congressional Budget Office (CBO) could issue a report regarding the implications on cost under the revised bill. In Mar 2017, the CBO had said that enacting the AHCA would cut federal deficits by $337 billion over the coming decade but the number of uninsured people would go up by 24 million in 2026 relative to Obamacare.
How Will the Senate Vote Go?
The next step for the bill is to go to the Senate for voting so it can be passed into law. However, with the House coming under fire for voting on the bill before the issuance of a CBO report, the Senate will most likely wait for the latest CBO report on expected costs and impact of the bill before it votes on the same. Moreover, the general opinion is that the bill will not be passed in its current state and the Senate may well come out with its own version. Getting the Senate to vote in favor may well prove to be an uphill task especially considering the Republicans can afford to lose only two votes for the bill to go through.
Stocks in Focus
If Trumpcare does become law, insurers like Humana Inc. (HUM - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Cigna Corporation (CI - Free Report) stand to benefit. Year-to-date (YTD), the Zacks-categorized Medical - Health Maintenance Organization industry has outperformed the S&P 500 with the industry climbing 11.9% compared to the overall market gains of 6.9%. Both UnitedHealth and Cigna are Zacks Rank #2 (Buy) stocks -- you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
But hospital stocks like Tenet Healthcare Corp. (THC - Free Report) , HCA Holdings, Inc. (HCA - Free Report) , LifePoint Health, Inc. , and Community Health Systems, Inc. (CYH - Free Report) will all be under pressure if Obamacare gets replaced. This is because hospitals benefited under Obamacare with more than 20 million people gaining coverage. However, Trumpcare is expected to result in an increase in uninsured people which is not good news for hospitals. Companies with a high exposure to Medicaid will also be under pressure. So far in 2017, the Zacks-categorized Medical-Hospitals industry has performed better than the S&P 500 with the industry gaining 14.1%.
The bottom-line is that Trumpcare still has a long way to go before it becomes law. Several aspects of the bill have come under criticism including the possibility of millions of people losing coverage and weaker coverage for those with pre-existing conditions. So watch out for volatility in this segment of the healthcare market in the near-term.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>