The main issue with Obamacare is that while everyone wants great health Insurance no one wants to pay any more than they have to for their insurance. The insurance mandate is essential if the country is to use private insurers and get everyone insurance coverage. The insurance mandate has been in the Republican cross hairs ever since the bill was passed. Now, after repeated failures by congress to repeal the Affordable Care Act the president is issuing an executive order as a way around and an attempt to get rid of Obamacare. What does killing Obamacare do to health insurance stocks? Investor’s Business Daily offers their opinions.
While TrumpCare couldn’t make it through Congress, TrumpCare lite only needed a single vote – President Trump’s. With Thursday’s executive order, Trump set in motion a plan to weaken ObamaCare while opening the door to insurance options that don’t have to comply with its regulations.
The move to disrupt the ObamaCare exchanges by offering a cheap alternative to relatively healthy customers who get little or no subsidy sent down shares of health insurers with a sizable presence on the exchanges. Shares of Centene (CNC) fell 2.6%, while Molina Healthcare (MOH) lost 0.6%. Meanwhile Anthem (ANTM), which has pulled back on its presence for 2018, was virtually unchanged in early afternoon trading on the stock market today.
Trump’s move, though, is positive for Health Insurance Innovations (HIIQ), which provides short-term health coverage of the sort that the White House wants to make much more widely available. Health Insurance Innovations rose 1.9%.
What the order does is tell federal agencies to allow short term health insurance plans that are cheaper and don’t offer all of the benefits required by the Affordable Care Act. Trump says this won’t cost the tax payers any money but experts doubt that because when young and healthy subscribers leave the main plans they drive up the cost for others and that cost typically falls back on tax payers to pick up the cost of treating the poor.
Meanwhile a number of short term plans may benefit along with the companies that offer them.
Timing, Rules and Who Gets Hurt
Like a lot of Trump’s actions this executive order is offered before specific rules have been written. Those rules might not get done in time to affect plans for the coming year. Also the individual mandate part of the law has a penalty that might apply to folks who go with the cheaper insurance option. Major insurance providers have put a lot of effort and a lot of money into setting up and rolling out insurance plans for the Affordable Care Act. These folks could end up holding the bag if the whole system goes down due to political game playing and poor planning. In short if the executive order goes through a number of small players will benefit and the big players in the health insurance and HMO industry will likely suffer as their stocks fall. Meanwhile technical analysis may provide an advantage to traders as this plays out.
What Does Killing Obamacare Do to Health Insurance Stocks? PPT
