Healthcare industry braces for change on Trump’s executive order

President Donald Trump signed an executive order on Friday that could scale back enforcement of some provisions of the Affordable Care Act, also called Obamacare, and analysts warned that shares of hospitals and Medicaid providers could face new pressure as fears over losing coverage grow.

President Trump wrote that government departments should “waive, defer, grant exemptions from, or delay the implementation” of provisions from the sweeping healthcare law that present fiscal burdens on states, companies or individuals, Reuters reported. Kellyanne Conway, a senior advisor to the president, said in an interview yesterday that the new administration may not enforce a key provision of the Affordable Care Act requiring individual Americans to pay a fine for not having health insurance.

The president’s order is the 1st in an effort by the Republicans to repeal and replace Obamacare under the new administration, a move that was the cornerstone of Trump’s campaign.

Although the program expanded health insurance coverage to nearly 20 million Americans, the Affordable Care Act has also ushered in increases to deductibles and insurance premiums and large insurers, such as Aetna Inc, have opted out of the system.

Some analysts said that scrapping the mandate requiring individuals to buy coverage will not change very much in the industry. “Fundamentally, I don’t think it’s going to make a difference,” Leerink Partners healthcare services analyst Ana Gupte said, according to Reuters. Gupte pointed out that young people did not buy health insurance at expected levels, even with the threat of increased fines.

Les Funtleyder, a healthcare portfolio manager for E Squared Capital Management, called into question the Obama administration’s enforcement of the rule. “We’re not sure as to how vigorously it was being enforced anyway,” Funtleyder said.

Others said that not enforcing some of the program’s key provisions is a “real risk” for 2017 insurance exchanges enrollment.

“We have to wonder why the hospital companies and investors who have pushed the stocks back up to pre-election levels would be so enthusiastic,” Mizuho Securities USA healthcare analyst Sheryl Skolnick wrote.

Trump’s plans could put pressure on insurers that administer state Medicaid plans, over fears that poor people could lose their coverage. If the new administration cuts state Medicaid funding, “it will put pressure on the number of people who are covered through Medicaid expansion,” Gupte added.

Hospitals could also face more unpaid medical expenses if the number of uninsured Americans grows.

Material from Reuters was used in this report.

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