Health Care ETFs In Focus As House Votes To Repeal Obamacare

May 5, 2017 7:14am NYSE:XLV

healthcare

From Brad Hoppmann: Republicans in the House of Representatives finally cobbled together enough “yes” votes to do what they’ve been promising to do for some seven years … repeal and replace the “Affordable Care Act” (ACA), aka Obamacare.


In his floor speech just prior to the vote, House Speaker Paul Ryan said:

“A lot of us have been waiting seven years to cast this vote … This bill delivers on the promises that we have made to the American people.”

If I were Paul Ryan, I guess I would be happy that the vote turned out the way it did.

In a party-line victory of 217 to 213, the House passed the “American Health Care Act” (AHCA).

Yes, it must be said that this is a legislative victory for House Republicans, and for President Trump. And, a victory was much-needed after the first round of negotiations in the House failed to even reach a vote.

Yet it’s a victory that will most likely only be fleeting.

I say fleeting, because now the bill must go to the Senate. There, it will undoubtedly undergo a major rewrite that will leave it nearly unrecognizable from its current form.

And even if the Senate manages to agree on changes to the ACHA and passes it, the House and the Senate would then have to renegotiate some kind of compromise legislation.

Well, that’s really unlikely given the deep divisions in the healthcare camp among Republicans.

Here are the highlights of the bill, as written in an article today at CNBC:So, what are the basic tenets of the new ACHA, and what are the major changes from existing law?

Increase the amount of premium subsidies for younger adults, and reduce the amount for older adults, while allowing subsidies to be used to buy individual plans outside Obamacare exchanges.

Allow older adults to be charged premiums that are five times higher than the premiums charged younger adults, instead of the 3:1 ratio established by Obamacare.

Impose a premium penalty for people who do not maintain continuous health coverage.

Convert Medicaid funding for states to a block-grant system.

Give states power to request waivers for insurers that allow them to charge people with pre-existing health conditions higher premiums if they let coverage lapse.

Establishes funding for states that can be used for “high-risk” individuals, or other purposes.

The ACHA also will end tax increases on higher income earners, and it will end the penalties for those who choose not to buy coverage. (Although there will be a penalty for those who let insurance lapse, and then re-enter the system.)

Interestingly, and perhaps not surprisingly, the House voted on the bill without it being scored by the Congressional Budget Office (CBO).

The previous version of the bill’s score wasn’t all that favorable, as that CBO analysis said the original bill would leave 24 million fewer people uninsured over the next decade while saving about $337 billion.

Unfortunately, if you are of the mindset that the big government is far too involved in the healthcare business, what House Republicans have done today doesn’t really offer much comfort.

Basically, the House voted to keep Obamacare’s essential subsidy and regulatory constructs in place. Sure, Republicans tweaked things a bit, and rearranged the deck chairs … but where’s the free-market push in this bill?

Maybe my eyes aren’t that good, but I’m having a really hard time finding the freedom buried among all this regulation.

The Health Care SPDR ETF (NYSE:XLV) was unchanged in premarket trading Friday. Year-to-date, XLV has gained 10.26%, versus a 6.81% rise in the benchmark S&P 500 index during the same period.

XLV currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 36 ETFs in the Health & Biotech ETFs category.


This article is brought to you courtesy of Uncommon Wisdom Daily.


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