Earlier this week stocks throughout the healthcare sector were hit hard after The House of Representatives voted to repeal President Obama’s healthcare reform law. Shares of the iShares Dow Jones US Healthcare Provider ETF (NYSE:IHF), fell close to 2 percent ahead of the vote, with hospitals and health care plans taking the biggest hits. Although the repeal is largely symbolic and unlikely to be approved in the Senate, it could give momentum to legal challenges against the law. The Bedford Report examines the outlook for companies in the Healthcare Sector and provides research reports on Tenet Healthcare Corporation (NYSE:THC) and Aetna, Inc. (NYSE:AET). Access to the full company reports can be found at:
The measure passed 245-189, with three Democrats joining all of the House’s 242 Republicans to support overturning the measure signed into law by Obama ten months ago. The repeal has little chance of taking effect. Democrats control the Senate and say they will block the effort in the chamber. Additionally, Obama would veto any such measure that reached his desk.
Hospitals such as Tenet Healthcare have been eagerly awaiting the influx of newly insured patients they may see as a result of the overhaul. High levels of unemployment had caused patients to become more penny conscious, often choosing to put off care they might normally have undergone. This had resulted in lower hospital visits and hurt revenues at a time when capital is more necessary than ever.
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Health insurers such as Aetna also took a hit following the repeal vote. As a result of reform, starting this year, insurers will have to meet minimum medical-loss ratios, which measure the percentage of premiums spent on medical care, or possibly issue rebates to consumers. Similar to hospitals, insurers are expected to see additional people covered in the long term as reform kicks in.
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