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Insurers & Hospital Stocks in Focus on CBO Report on Trumpcare
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The Congressional Budget Office (CBO) released its report on the direct spending and revenue impact of the revised American Health Care Act (AHCA) bill that got support from the House of Representatives earlier this month.
According to the CBO report, enacting AHCA or Trumpcare, as it is often referred to, would cut federal deficits by $119 billion between 2017 and 2026 while about 23 million people would lose health coverage in 2026 compared to Obamacare.
A detailed look at the report shows that while 14 million more people would be uninsured in 2018, this number is expected to reach 19 million in 2020 and 23 million in 2026. In 2026, about 51 million people under the age of 65 would be uninsured, compared to 28 million who would lack insurance that year under Obamacare.
Earlier in Mar 2017, the CBO had said that enacting the AHCA would cut federal deficits by $151 billion over the coming decade but the number of uninsured people would go up by 24 million in 2026 relative to Obamacare.
Another very important takeaway from the latest CBO report is that health care costs for people with pre-existing or newly acquired medical conditions could shoot up significantly in some states under Trumpcare.
We note that earlier this month, the House had faced intense criticism for voting on the bill before the CBO could issue a report on the revised bill, which was reintroduced with a few changes aimed at winning over some of the more conservative lawmakers.
Some of the key points in the revised bill include 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 next step is for the Senate to move forward in working to draft its own version of the health care legislation.
Stocks in Focus
If Trumpcare does become law, insurers like Humana Inc. (HUM - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) stand to benefit. Year-to-date (YTD), the Zacks-categorized Medical - Health Maintenance Organization (HMO) industry has outperformed the S&P 500 with the industry climbing 14% compared to the overall market gain of 7.7%. UnitedHealth and Humana are both Zacks Rank #2 (Buy) stocks -- you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The HMO industry is among the top 30% of the Zacks-ranked industries.
Meanwhile, 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. Hospital stocks had benefited under Obamacare with more than 20 million people gaining coverage. However, Trumpcare is expected to result in an increase in uninsured people which does not bode well for this sector. The Hospitals industry is currently among the bottom 19% of the Zacks-ranked industries.
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 expect volatility in this segment of the healthcare market in the near-term.
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Insurers & Hospital Stocks in Focus on CBO Report on Trumpcare
The Congressional Budget Office (CBO) released its report on the direct spending and revenue impact of the revised American Health Care Act (AHCA) bill that got support from the House of Representatives earlier this month.
According to the CBO report, enacting AHCA or Trumpcare, as it is often referred to, would cut federal deficits by $119 billion between 2017 and 2026 while about 23 million people would lose health coverage in 2026 compared to Obamacare.
A detailed look at the report shows that while 14 million more people would be uninsured in 2018, this number is expected to reach 19 million in 2020 and 23 million in 2026. In 2026, about 51 million people under the age of 65 would be uninsured, compared to 28 million who would lack insurance that year under Obamacare.
Earlier in Mar 2017, the CBO had said that enacting the AHCA would cut federal deficits by $151 billion over the coming decade but the number of uninsured people would go up by 24 million in 2026 relative to Obamacare.
Another very important takeaway from the latest CBO report is that health care costs for people with pre-existing or newly acquired medical conditions could shoot up significantly in some states under Trumpcare.
We note that earlier this month, the House had faced intense criticism for voting on the bill before the CBO could issue a report on the revised bill, which was reintroduced with a few changes aimed at winning over some of the more conservative lawmakers.
Some of the key points in the revised bill include 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 next step is for the Senate to move forward in working to draft its own version of the health care legislation.
Stocks in Focus
If Trumpcare does become law, insurers like Humana Inc. (HUM - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) stand to benefit. Year-to-date (YTD), the Zacks-categorized Medical - Health Maintenance Organization (HMO) industry has outperformed the S&P 500 with the industry climbing 14% compared to the overall market gain of 7.7%. UnitedHealth and Humana are both Zacks Rank #2 (Buy) stocks -- you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The HMO industry is among the top 30% of the Zacks-ranked industries.
Meanwhile, 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. Hospital stocks had benefited under Obamacare with more than 20 million people gaining coverage. However, Trumpcare is expected to result in an increase in uninsured people which does not bode well for this sector. The Hospitals industry is currently among the bottom 19% of the Zacks-ranked industries.
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 expect volatility in this segment of the healthcare market in the near-term.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>