Hospital Stocks Headed for Rocky Ride Through Obamacare Repeal

Investors in hospital stocks are banking on a key idea: the GOP’s final overhaul of Obamacare won’t be as bad as it looks right now.

The current version of American Health Care Act, headed for a House floor vote Thursday, would slash billions from health spending and raise insurance costs for many, according to an analysis by a nonpartisan government body. That would be bad news for hospitals, which must take care of sick patients whether or not they can pay.

Michael Newshel, an analyst at Evercore ISI said:

“There’s still an expectation that what passes the Senate will look a lot better than what we have now for hospitals.”
Obamacare was signed into law exactly seven years ago. Health- care stocks boomed under its first five years amid increased medical spending and a run of consolidation among drug and device makers. The S&P 500 Health Care Index more than doubled from the date the legislation was signed.

Smaller community hospitals and safety net hospitals would be hit hardest under the bill.  Lower payments from fewer Medicaid patients would cause uncompensated care costs

Trump’s proposed budget indicates more bad news for hospitals, said John Morrow, an analyst with Franklin Trust Ratings. The budget, primarily an indication of the president’s priorities, reduces discretionary spending for the Department Health and Human Services 23 percent.

Source Bloomberg

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