Trump to Expedite the Death of Obamacare; Healthcare Stocks Clown-Punch Lower

Content originally published at iBankCoin.com

Over the weekend it was announced that President Trump was going to ditch restrictions that banned people from buying health instance across state lines. For the love of God, he"s going to allow competition and not force you to buy from your state monopoly. While this might sound wonderful, it will expedite the death of Obamacare -- which is probably the gameplay here.

Trump can"t get his way, so he"s gonna burrrrn the whole kit and caboodle down.

Source: Washington Examiner

The plans offered by associations would be less expensive because they wouldn"t have the same requirements as Obamacare coverage. For instance, they wouldn"t be required to cover customers with pre-existing illnesses and could either deny coverage or charge these customers more. They also would not be required to provide coverage for a range of medical care, from addiction to maternity services. Insurers would be likely to sell coverage from a state with the fewest restrictions, which is why its supporters bill it as a move that would allow a long-stated conservative goal to sell health insurance across state lines.
 
Association health plans used to be more common before Obamacare, which placed restrictions on their use.
 
Lifting these protections would offer less comprehensive coverage, but would also make health plans less expensive. Critics worry that they set people up for "junk insurance" and would further destabilize the Obamacare exchanges, which already are plagued with mass exits by insurers and double-digit premium hikes. The move, critics say, could result in an even sicker population on the exchanges while healthier customers are picked off into the association health plans.
 
Still, the proposal is popular with conservatives. Middle class customers who don"t receive subsidies under Obamacare are facing the prospect of buying more expensive coverage in 2018 through Obamacare"s exchanges, and could avail themselves of the option. Through a short-term health insurance option, they face similar coverage as those sold on association health plans.
 
The increases these customers face come as a result of lack of profitability in the markets as well as vast uncertainty over what the Republican-controlled Congress and the Trump administration would do about the law as they sought for months to repeal or overhaul portions of it.

 
A backdoor way of totally destroying Obamacare and there is nothing anyone can do about it -- chaos theory.

Healthcarefags, BTFO.

ESRX -5%, ABC -3%, CYH -6%, THC -5%, LPNT -3%, CVS -3%, DVA -8.5%, AAC -5.5%, ACHC -4%.

The only outlier: HIIQ.

Health Insurance Innovations: Trump rollback benefits HIIQ -- Canaccord Genuity (18.05 +1.15)

Canaccord notes that in light of WSJ reports that President Trump intends to roll back certain health insurance regulations concerning short-term medical insurance, which should have a direct benefit to Tampa-based Health Insurance Innovations (HIIQ), firm feels, "This should be positive for HIIQ: Even though 2Q"17 was still a strong quarter, we believe results would have been even better (specifically at Agile) if the Obama policy did not go into effect; thus, we believe the reversal of the three-month limitation rule will be positive for growth at Agile in addition to providing a greater sense of legitimacy for STM insurance, especially in light of the recent negative sentiment generated by the various short reports. Furthermore, we would point out that a main driver of the stock"s performance since Trump won the election was the potential for him to de-regulate the insurance industry and reverse the three-month limitation; thus, it is encouraging to see this play out."

All You Need To Know About CBO Forecasting "Accuracy" In Two Charts

Even as the Republican effort to repeal Obamacare in recent months has suffered one humiliating loss after another, at the hands of none other than the very same Republican party, one government agency has been repeatedly scapegoated for the GOP"s failure to come up with a credible and passable alternative to Obamacare: the Congressional Budget Office. Then agan, while hardly an excuse for their sheer incompetence, the GOP is certainly right to point the finger at the CBO"s track record of "forecasts", one which we have mocked here on occasion after occasion after occasion.

And here, in just two charts, is why when it comes to matters of predictive accuracy, the CBO is almost as bad as the Federal Reserve.

First, here is the CBO"s history of Obamacare enrollment forecasts...

... and here is its projection on the trajectory of US debt.

Senate GOP Releases Revised Healthcare Bill

Senate Republicans, led by Mitch McConnell, have just released "modest" revisions to the "draft" healthcare bill that was dropped last week.  The only substantive change appears to be the addition of a "waiting period" on those who allowed their coverage to lapse for a period of 63 days or more during the prior coverage year.

"Starting in 2019, individuals who had a break in continuous insurance coverage for 63 days or more in the prior year will be subject to a six month waiting period before coverage begins.  Consumers will not have to pay premiums during the six month period."

Here is a summary of the changes:

Here are the changes in the revised version of the Senate GOP health care bill, just released: pic.twitter.com/hJ0sAQLHkI

— Frank Thorp V (@frankthorp) June 26, 2017

Of course, the real question now becomes whether or not Republican leaders in the Senate will stick to their guns and force a vote this week.  While Senator Cornyn seems adamant that a vote this week ahead of the July 4th recess is an absolute necessity, perhaps he would be well served to take a look back at how well the rushed process worked out in the House back in March (see: In Stinging Defeat, House Republicans Abandon Obamacare Repeal Effort).

I am closing the door. We need to do it this week before double digit premium increases are announced for next year. https://t.co/Cxi3qAslg3

— JohnCornyn (@JohnCornyn) June 26, 2017

The full text of the bill can be reviewed here:

Bad News For Wall Street: No Tax Reform Until Fiscal 2018, McConnell Warns

As explained, most recently two days ago, the key reason Wall Street is concerned about the complications involving Obamacare"s "repeal and replace", which now appears will be stuck in Congress for a long time following vocal opposition from various conservative groups and outside lobby interests, is that it will delay tax reform. As Goldman laid it out over the weekend, "if Republican leaders cannot send the President an ACA bill by April or May, they will face two politically unpalatable options. First, they could continue to press for a solution, delaying consideration of tax reform for an indefinite period. This delay would occur because both proposals are expected to be considered under the “budget reconciliation” process. However, since only one tax bill and one spending bill can be considered under that process in each budget cycle—and ACA repeal legislation is expected to have tax and spending provisions—Republican leaders plan to consider the ACA bill in the FY2017 budget cycle, and to begin the FY2018 budget cycle, including instructions to pass tax reform, once the ACA bill has passed."

The other option Goldman put forward would be to postpone ACA legislation and move to tax reform, essentially reneging on a campaign commitment.

That however is not going to happen. Instead, in some very bad news for Wall Street, earlier today Senate Majority Leader Mitch McConnell confirmed the worst case outcome, when he poured cold water on the Trump administration"s goal of completing tax reform by the August recess.  "I think finishing on tax reform will take longer," McConnell said during a Playbook Live interview.

This automatically means that tax reform will be part of the 2018 Fiscal Year, and will not be implemented in the current budget year ag all.

Previously, Treasury Secretary Steven Mnuchin had raised Wall Street"s hopes when he said in February that the administration wants to wrap up a long-held GOP goal of overhauling the tax code before lawmakers leave for a month-long break.  “So we are committed to pass tax reform,” he told CNBC. “We want to get this done by the August recess.”

Alas, according to the Senator, this will not happen, and may instead drag on well into the end of 2017 or even 2018. The Senate is tentatively scheduled to leave town by July 31st and return during the first week of September. 

Pressed about when he thought lawmakers would be able to complete tax reform, the Senate"s top Republican demurred.  "It is complicated. All of those discussions are already under way," McConnell said. "How do you craft it?" As was already known - and eliminating Goldman"s second option above - McConnell added that the Senate has to wrap up work on an ObamaCare repeal bill, also being passed through reconciliation, before it can bring tax reform to the floor.

In other words, tax reform - the main catalyst behind the market"s relentless surge since the election - may not be coming this year at all. It also means that readers can now add 3-6 months for every "tax-related" catalyst date in the chart below.

Incindetally, Wall Street appears to be gradually coming to terms with this: below we show that investors have clearly downgraded their view of tax reform, judging by the relative performance of a basket of high-tax stocks, which should benefit disproportionately from tax reform. They no longer are.

Trump Promises "Insurance For Everybody" In Obamacare Repeal

Just two days after both the House and Senate passed a budget resolution clearing the way to repeal and replace Obamacare, the President-elect has told the Washington Post that his replacement bill is nearly complete and envisions "insurance for everybody."  Although no specific timeline was given for the announcement of legislation, the CR passed by Congress last week gives the various committees until January 27th to present a bill.  Per Reuters:

"It’s very much formulated down to the final strokes. We haven’t put it in quite yet but we’re going to be doing it soon," Trump told the Post, adding he was waiting for his nominee for health and human services secretary, Tom Price, to be confirmed.

The plan, he said, would include "lower numbers, much lower deductibles," without elaborating.

“We’re going to have insurance for everybody,” Trump said. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”

“It’ll be another plan. But they’ll be beautifully covered. I don’t want single-payer. What I do want is to be able to take care of people,” he added.

Meanwhile, taking a similar approach to his efforts with Boeing and Lockheed Martin to lower costs, Trump vowed to bring down drug prices by forcing big Pharma companies to negotiate directly with the government for Medicare and Medicaid pricing.

Moving ahead, Trump said that lowering drug prices is central to reducing health-care costs nationally — and that he will make it a priority as he uses his bully pulpit to shape policy. When asked how exactly he would force drug manufacturers to comply, Trump said that part of his approach would be public pressure “just like on the airplane,” a nod to his tweets about Lockheed Martin’s F-35 fighter jet, which Trump said was too costly.

Trump waved away the suggestion that such activity could lead to market volatility on Wall Street. “Stock drops and America goes up,” he said. “I don’t care. I want to do it right or not at all.” He added that drug companies “should produce” more products in the United States.

The question of whether the government should start negotiating how much it pays drugmakers for older Americans on Medicare has long been a partisan dispute, ever since the 2003 law that created Medicare drug benefits prohibited such negotiations.

"They’re politically protected but not anymore,” he said.

Of course, as we mentioned last week, Kellyanne Conway hinted that the Pharma industry would be in the crosshairs of Trump"s new healthcare law, telling Bloomberg that "to repeal and replace Obamacare without having a conversation about drug pricing seems like not a reasonable prospect."

Without giving a timeline, Trump said that he expects Republicans in Congress to work quickly to pass his new healthcare legislation and threatened that any splintering of the Republican party would be met with an aggressive appeal directly to the American people to put pressure on their Congressmen.

Trump said he expects Republicans in Congress to move quickly and in unison in the coming weeks on other priorities as well, including enacting sweeping tax cuts and beginning the building of a wall along the Mexican border.

Trump warned Republicans that if the party splinters or slows his agenda, he is ready to use the power of the presidency — and Twitter — to usher his legislation to passage.

“The Congress can’t get cold feet because the people will not let that happen,” Trump said during the interview with The Post.

Of course, as we"ve said before, while Democrats and some Republicans will certainly fight it, whatever bill is introduced by the Trump administration will almost certainly be better than the status quo.

Obama Heads To The Hill To Strategize With Dems On Fighting Obamacare Repeal

Yesterday we noted that Republicans are considering a piecemeal repeal of Obamacare even though they have no viable alternative that has been fully vetted and stands ready to replace the failed legislation (see "Republicans Consider Obamacare Repeal Without A Replacement Strategy").  And while King Obama is happy to leave a path of destruction on his way out of the White House for the new administration to clean up, he"s not so keen on Trump"s vow to repeal his single crowning piece of legislation.

And while there"s not much that Democrats can do at this point to stop a repeal by Republicans, Obama has decided to schedule a rare meeting at the Capitol next week to strategize with House and Senate Democrats and "share his perspective about the dangers posed by Congressional Republicans’ stated strategy."  Per The Hill:

Obama will hold a joint meeting with House and Senate Democrats at 9 a.m. Wednesday in the Capitol Visitor Center auditorium. The notice for the meeting says the session is expected to last "at least one hour."

The White House said Obama will use the meeting to "share his perspective about the dangers posed by Congressional Republicans’ stated strategy to repeal the [Affordable Care Act] before proposing any replacement, creating chaos in the health system in the short run — and holding hostage Americans’ health care — while Republicans develop their plan."

Unfortunately for Dems, given that Republicans will control all three branches of government next month and only a simple majority vote will be required to repeal the law in the Senate through the reconciliation process, they"re pretty much powerless.  In light of their weak position, Chuck Schumer and Nanacy Pelosi have decided to do what Democrats always do when they lose...organize protests which will inevitably result in violence and the destruction of private property.

Powerless against a reconciliation bill, Democrats are trying to gin up political pressure to try and stop the Republican push.

Top Democrats Sen. Charles Schumer (D-N.Y.) and Rep. Nancy Pelosi (D-Calif.) are organizing rallies against repeal for Jan. 15, and pro-ObamaCare groups have launched ads in states with Republican senators that they think are most likely to be swayed. Those states include Arizona and Nevada, home to the two 2018 Senate races where Democrats are seen as having some chance of picking up a seat.

Democrats argue that Republicans should not repeal the law, even on a delay, and jeopardize healthcare for more than 20 million people until they have put forward a replacement plan.

Republicans do not need Democratic votes to repeal the core of the law through the special process known as reconciliation, which allows the measure to advance with a simple majority in the Senate.

And while Chuck and Nancy are hopeful they can flip Republican Senators from Arizona, we suspect that modest 145% Obamacare premium hike for 2017 might be a slight problem...

Oh well, just keep sailing forward Obama, we"re sure all will work out well.