Hospital Shares Tumble in Reaction to Senate’s Latest Proposed Healthcare Reform Bill

The Senate’s healthcare reform bill was unveiled on Thursday, July 13. The bill shows an awkward balancing attempt by Majority Leader Mitch McConnell to gain votes from the most conservatives members while at the same time trying to appease to moderates who want to retain certain elements of Obamacare. The legislation is currently being prepped by McConnell and will be going up for a vote sometime next week. Senate Republicans were discussing the bill in a closed-door meeting, but reporters were able to obtain an outline of it.

The newly proposed bill will allow insurance companies to sell plans that don’t meet requirements set by Obamacare. This will most likely drive some people to choose these cheaper plans and as a result cause more comprehensive coverage plans to be more expensive. Because of this, the bill also includes plans to create a fund that will hopefully help insurance companies cover more high-risk people who need plans that meet Obamacare standards and are more comprehensive. As well, in order to qualify to sell plans that don’t meet Obamacare, insurance companies will need to sell plans that do meet the requirements of Obamacare.

The bill, if passed, will also allow people to use tax credits to buy high-deductible catastrophic health insurance. As well, people will be able to pay their monthly premiums using their health savings account.

To address concerns and criticism that Trump administration’s rollback of Obama’s 2010 Affordable Care Act, or Obamacare — created to address the lack of affordable healthcare in the United States — is a tax cut for the rich, McConnell’s newly reformed legislation will keep Obamacare’s 3.8% net investment income tax and 0.9% Medicare payroll tax for people with an income above $200,000 and couples with an income above $250,000. It will also be retaining the remuneration tax on executive compensation for certain health insurance executives.

The condition outlined in the new bill that allows insurance companies to sell plans that don’t necessarily meet Obamacare requirements is a variation of an idea by Senator Ted Cruz, R-Texas, and Sen. Mike Lee, R-Utah. The support of Cruz and Lee are crucial because, in order to pass the bill with no Democrat support, McConnell can only afford to lose support from two Republicans. However, this condition is not set as the Congressional Budget Office (CBO) has been reviewing two drafts of the bill — one that includes Cruz and Lee’s idea and one that does not. The CBO’s estimation of how this particular provision will affect federal budget, as well as those who are not insured, will play a big part in the Republicans’ decision on which bill — the one with the provision or the one without — to move forward with.

McConnell is also attempting to keep support from moderates by adding $70 billion to a state stabilization fund to help lower premiums on top of the $112 billion originally proposed in the first draft of the bill. As well, $45 billion will be provided to help fund programs and/or endeavors for substance abuse treatment and recovery. In addition, the bill addresses the impacts from Medicaid rollback by allowing states to get their Medicaid expansion population covered by an expanded Medicaid block grant. However, details like how big the grant is or how much of the expansion population can actually receive coverage under the grant have yet to be set.

When it came to the negative impact this rollback from Obamacare’s Medicaid expansion will have on hospital finances, the new bill addressed this by basing disproportionate share payments on the number of uninsured people that are treated rather than the number of Medicaid enrollees that are treated.

Following the release of details on the newly drafted bill, shares of many hospitals and healthcare centers like Quorum Health Corp. (NYSE:$QHC), HCA Healthcare Inc. (NYSE:$HCA), Community Health Systems (NYSE:$CYH), and Tenet Healthcare Corp. (NYSE:$THC) all went down. Only shares of a handful of hospitals, like LifePoint Health Inc. (NASDAQ:$LPNT), went up.

Even with the attempt at retaining some of Obamacare’s provisions and lowering the impact caused by Medicaid rollbacks, Capitol Hill vote counters believe McConnell will still face quite a challenge in ensuring the newly drafted bill get enough votes to pass.

Already, Sen. Rand Paul, R-Ky, has told reporters that he won’t be voting for the reformed bill, saying that it was worse than the original. Moderate Republicans are also vying for further examination and possible changes for the bill. Sen. Susan Collins, R-Maine, Shelley Moore Capito, R-W.V., Rob Portman, R-Ohio, Jerry Moran, R-Kan., Lisa Murkowski, R-Alaska, and Dean Heller, R-Nev., have all stated that as long as there is a rollback of Medicaid’s expansion, they won’t be voting for the bill.

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