With the unveiling, Thursday, of the draft Senate health care bill, came the mostly anticipated cheers and jeers.
Much of the initial response – from both the Democrats and some Republicans was negative.
The tenor of that response mostly depended on which side of the aisle the response came from. Senator Rand Paul, for example, saying, “We can do better than this,” argued that the draft bill didn’t go far enough to repeal and replace “Obamacare.” Senators and voices on the Democratic side said the bill was far too restrictive and draconian.
While debate continues, advocates and critics alike await word from the non-partisan Congressional Budget Office (CBO) regarding its estimate of the bill’s cost. That should come next week. Major questions to be answered include the number of people expected to lose health insurance if the bill becomes law.
The House bill was estimated to leave 23 million people without insurance. If the Senate version leaves a similar number uninsured that could spell trouble. The House version was expected to reduce the federal deficit by $119 billion in the next decade. The impact of the Senate version will receive scrutiny as well.
Investors On Watch
Meanwhile investors interested in the impact of all this on health care stocks have a lot of factors to watch. One of them is the area of insurance deductibles. At this point, signs indicate deductibles will likely rise. This could increase pressure on the health care industry to control costs.
If reductions in Medicaid spending in the final bill approach the size of those proposed by the Senate version, the earnings power of health care providers could be severely affected. That said, out-of-pocket costs for patients could be a bigger deal. The House bill, for example was estimated to increase total out-of-pocket spending by $221 billion over 10 years. In real terms, a Kaiser Family Foundation analysis in March said the American Health Care Act could raise the typical annual deductible for an individual plan to $4,100 from $2,550 under “Obamacare.”
Related: UNCERTAINTY IN HEALTH CARE LOOMS
Health Care Stocks On A Roll For Now
Leading up to the unveiling of the Senate plan – and well ahead of a final actual law – health care stocks have been doing well in general. Whether that will last will be determined, in large part, on investor attitudes and news out of Washington.
Stocks being touted as good picks for 2017 include: UnitedHealth Group (NYSE:UNHB), the country’s largest health insurer with a massive market cap of almost $160 billion; Stryker Corp. (NYSE:SYKC), a medical device company that closed two major acquisitions in 2016 and Brookdale Senior Living (NYSE:BKDB), which merged with Emeritus in 2016 and is considered to be positioned for long-term growth.
Other players include: Biotech company, Celgene Corp. (NASDAQ:CELGA); animal health player, Zoetis (NYSE:ZTSC) and Johnson & Johnson (NYSE:JNJC), considered to be the most valuable health care company on the planet.