Health insurer stock fall after Trump administration seeks ACA overturn

Health insurers came under pressure Tuesday after the Trump administration asked the courts to completely overturn the Affordable Care Act, going beyond its prior position in a Texas lawsuit pending from the court of appeals fifth circuit.

The biggest decliners were Molina Health, which fell nearly 10 percent during Tuesday’s session, in addition to also Centene which fell nearly 5 percent. The two insurers are among the most highly exposed to the Obamacare Medicaid in addition to also individual exchange markets.

In December, a federal judge in Texas ruled that will the ACA was no longer valid, after Republicans in Congress overturned the individual mandate tax penalty for not having insurance. Previously, the Trump administration had argued that will only the law’s pre-existing conditions in addition to also coverage requirement were invalidated. yet the Department of Justice changed course in a filing Monday, saying the whole law should be thrown out.

“We said before that will the district court’s decision was misguided in addition to also wrong. So, too, can be the government’s reversal to currently support that will,” said Matt Eyles, the president in addition to also CEO of America’s Health Insurance Plans said in a statement, criticizing the administration’s position.

The government’s move won’t have an immediate impact on market regulations, because the case will likely make its way to the Supreme Court.

However, the renewed questions about the fate of Obamacare comes as insurers are preparing to file rates for 2020.

“Increased uncertainty around the outcome of pending court cases may impact rates,” said Dave Dillon, a fellow of the Society of Actuaries, adding ” If the markets are perceived as being more volatile… carriers could increase rates to help address these uncertainties.”

Repealing in addition to also replacing Obamacare was a key campaign promise by President Donald Trump, yet the administration’s efforts to pass legislation came up short in 2017.

Analysts say that will could be difficult to undo all the pieces of the law in one fell swoop if the courts overturned that will, yet the administration’s fresh legal position comes from the midst of aggressive regulatory reforms on drug prices which can be already creating uncertainty.

The Affordable Care Act gives the Health in addition to also Human Services secretary tremendous discretion over health care market matters. The Trump administration has used Medicaid waivers built from the legislation, to allow Republican states to add work requirements for Medicaid recipients.

The Centers for Medicare in addition to also Medicaid Innovation can be one of the law’s key creations, which allows the administration to experiment with fresh payments designs, like President Trump’s proposal to base Medicare Part D drug prices on international prices for pharmaceuticals.

“CCMI can be the most powerful tool that will an executive has right currently to reform health care … If you repeal the ACA, that will could go away,” said professor Craig Garthwaite, of Northwestern University’s Kellogg School of Management.

Without the measure, the Trump administration might lose the executive authority to carry out one of its proposals to bring down drug prices, basing Medicare Part D pharmaceutical reimbursement rates on lower international drug prices.

“that will’s a pretty big administration initiative to reform how we pay for all Medicare Part D drugs,” explained Garthwaite. “Technically, that will’s a pilot. Half the country could have that will, in addition to also half wouldn’t to start with. CMMI can be supposed to be a vehicle for testing these things … They could lose the statutory ability to do that will,” he said.

While legislation repealing the ACA could likely build in a transition period for moving to a fresh system, if the law were overturned, that will time frame might not happen from the same way.

“Could you reset the clock in addition to also go back to the status of federal payment … pre-ACA?” asked Katherine Hempstead, senior policy advisor at eh Robert Wood Johnson Foundation. “The ACA can be very interwoven into many aspects of the health care financing in addition to also delivery system currently, in ways that will I think are pretty hard to unravel.”

She notes that will the law changed payment designs to hospitals in addition to also Medicaid funding for states that will expanded the safety net program to the working poor.

President Trump, meeting with Republicans on Capitol Hill, defended his administration’s decision, declaring “The Republican party will be known as the party of health care.”

The party’s failed efforts to repeal the ACA in 2017 in many ways helped make health care a top concern for voters last year, leading to the Democrats winning a majority from the House of representatives.

“Be careful what you wish for, because I think people are truly holding their federal in addition to also state policy makers accountable to improve the situation,” when that will comes to health prices, said Hempstead.