President Trump signed an executive order on Friday urging
government departments to "waive, defer, grant exemptions from, or
delay the implementation" of provisions of the Affordable Care Act,
known as Obamacare, that imposed fiscal burdens on states, companies
While the order lacked details, it signaled the start of an effort
by Trump and Republicans to repeal and replace the program, which
expanded health coverage to some 20 million people. Obamacare has
been plagued by increases in insurance premiums and deductibles and
by some large insurers, including Aetna Inc <AET.N>, largely pulling
out of the system.
The new administration may no longer enforce an Affordable Care Act
rule requiring individual Americans to pay a penalty for not
carrying health insurance, Kellyanne Conway, counselor to the
president, said on ABC's "This Week" program on Sunday.
The healthcare exchange system that is the cornerstone of the
Affordable Care Act depends on premiums from healthy, younger
individuals, typically between ages 18 to 34, to offset higher
expenses for covering older, less healthy individuals.
The scrapping of enforcement was "a real risk" for 2017 insurance
exchanges enrollment, Sheryl R. Skolnick, a healthcare analyst for
Mizuho Securities USA Inc, said in a research note on Saturday.
"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," Skolnick wrote.
But young people did not buy health insurance at desired levels,
even when penalties increased for not having the coverage, said Ana
Gupte, a healthcare services analyst for Leerink Partners LLC in New
"Fundamentally, I don't think it's going to make a difference," if
the so-called 'individual mandate,' requiring individuals to buy
coverage or pay a penalty, is scrapped, said Gupte.
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Some experts also question whether the Obama administration itself
was vigilant about enforcing the rule.
"We're not sure as to how vigorously it was being enforced anyway,"
said Les Funtleyder, healthcare portfolio manager for E Squared
ACROSS STATE LINES
Still, Trump's plans could pressure shares of insurers such as
Molina Healthcare Inc, Centene Corp and WellCare Health Plans Inc,
who administer state Medicaid plans, over concerns that the number
of insured, especially among the poorest, would shrink.
If Medicaid funding becomes less than what states are receiving now,
"it will put pressure on the number of people who are covered
through Medicaid expansion," Gupte said.
Hospitals may also be on the hook for more unpaid medical expenses
as the number of uninsured individuals increase and seek emergency
room treatment, Gupte added. Longer term, though, the hospital
industry is lobbying to get more money for unpaid expenses and "it
looks like they will get what they want," Gupte said.
(Reporting by Suzanne Barlyn; Editing by Peter Henderson and Randy
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