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Trump, House Republicans Seek Delay In Healthcare Ruling - Because They're Afraid They'll Win

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Trump, House Republicans Seek Delay In Healthcare Ruling - Because They're Afraid They'll Win
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Republican legislators have long resisted the Affordable Care Act and fought for its repeal, but this week, the Trump Administration and House Republicans seemed to initiate a retreat.

CSR Payment Concerns

In May 2016, the party won a lawsuit blocking the Obama Administration from issuing “illegal” cost-sharing reduction (CSR) payments to insurers. The ruling has been brought before a federal appeals court expected to uphold the decision — but on Tuesday, Republicans requested a delay in the court’s consideration.

Height Securities suggested that the move was meant to buy a little time.

“The Trump Administration and House Republicans sought the additional delay because a House Republican victory at the appellate level would almost certainly result in complete collapse of the exchanges since insurers would still be required to reduce cost-sharing for qualifying individuals but the government would no longer be able to reimburse them for such assistance,” Height wrote in a Wednesday note.

Related Link: Companies That Have The Most To Lose If Obamacare Is Repealed

Insurance companies have asserted that their participation in the exchanges is largely dependent on federal support for CSR payments, so discontinuation of funding would dismantle the entire system. Height speculated that a delayed ruling would given House Republicans time to appropriate the funds or work out another plan.

Time to Deliberate

With the future of the ACA largely uncertain, the Centers for Medicare and Medicaid Services (CMS) announced a deadline extension for insurers to report their 2018 participation. Companies now have until June 21 rather than May 3, but as open enrollment is still on track to begin Nov. 1, the seven-week delay ultimately limits CMS’s time for application review and insurers’ time to submit revisions.

Still, the new conditions are generally favorable.

“This delay will give health insurers additional time to consider the changes proposed by CMS in its proposed rule on ‘Market Stabilization,’ to decide if Congress is creating a hospitable environment as it works on ACA ‘repeal and replace,’ and to await Congressional funding for the CSR program in 2017,” Height wrote.

The immediate futures of Aetna Inc (NYSE: AET), Humana Inc (NYSE: HUM), CIGNA Corporation (NYSE: CI), Anthem Inc (NYSE: ANTM) and Molina Healthcare, Inc. (NYSE: MOH) hang in the balance as Republicans rethink their “repeal and replace” plan.

Image Credit: By Chairman of the Joint Chiefs of Staff from Washington D.C, United States - 170206-D-VO565-029, Public Domain, via Wikimedia Commons

Latest Ratings for AET

DateFirmActionFromTo
Jan 2017Leerink SwannDowngradesOutperformMarket Perform
Jan 2017PiperJaffrayInitiates Coverage OnNeutral
Nov 2016Credit SuisseUpgradesNeutralOutperform

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