Companies That Have The Most To Lose If Obamacare Is Repealed
We are closing in on Donald Trump's elevation to the highest office in the country, and a range of emotions runs through the minds of different stakeholders as Trump has threatened large-scale policy overhauls.
One of policies that Trump is taking potshots at is Patient Protection and Affordable Care Act, commonly called the Affordable Care Act, ACA or colloquially "Obamacare." The ACA was enacted by President Barack Obama on March 23, 2010, and upheld by the Supreme Court on June 28, 2012. The primary objective of the ACA was to increase insurance quality and affordability, lower the uninsured rate by expanding insurance coverage and reduce the cost of healthcare.
If the ACA is repealed upon Trump assuming office, what would be the ramifications for the different stakeholders involved like the insurers, employers, hospitals, etc.
A repeal of Obamacare could work either way for an insurer: Large insurers such as UnitedHealth Group Inc (NYSE: UNH) have been hurt very badly by selling their plans through exchanges and adhering to consumer-centric regulations. If dismantled, the industry could avoid paying the healthcare insurance industry tax. The restriction that limits the ratio of premium paid by old people to young to 3:1 from the current 6:1, if removed, could help the insurers bring premiums in line with the cost of care.
However, a repeal could lead to a steep drop in the number of people enrolled in state Medicaid programs. Obamacare allowed leeway for states to join Medicaid expansion, and with over 30 states choosing to join, Medicaid enrollment has grown by leaps and bounds, rising by 15.4 million since the launch of Obamacare to 72.8 million.
Though large insurers also take part in state Medicaid program, smaller insurers, such as Molina Healthcare, Inc. (NYSE: MOH), that draw a majority of income from state Medicaid programs would be the worst hit. Aetna Inc (NYSE: AET) and Anthem Inc (NYSE: ANTM) could see their share of revenues shrinking.
Hospital chains such as HCA Holdings Inc (NYSE: HCA), Tenet Healthcare Corp (NYSE: THC), Universal Health Services, Inc. (NYSE: UHS), Community Health Systems (NYSE: CYH), Select Medical Holdings Corporation (NYSE: SEM) and HealthSouth Corp (NYSE: HLS) could be impacted if the ACA is repealed, as the rollback of the tax credit received by customers' of the Obamacare exchanges for reducing the cost of their monthly premiums would leave hospitals will fewer paying customers.
Those hospitals with huge exposure to rural areas, such as Community Health and Tenet Healthcare, are likely to be the worst hit. It is also believed that hospitals may now have to freeze hiring or let go people, given the shrinking effect, an Obamacare repeal can have on paying customers.
Employers may not be mandated to offer insurance coverage to their employees who work for more than thirty hours a week. Additionally, employers may not be required to keep children below 26 on their parent's insurance plans. The decision to retain or do away with benefits would be at the sole discretion of employers.
Image Credit: Derived from Obama (Obamacare) [CC BY-SA 4.0], via Wikimedia Commons
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