Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jeremy Glaser and Matthew Coffina, CFA | 10-17-2012 01:00 PM

How Will the Election Affect Health Care?

Morningstar's Matt Coffina breaks down how Republican or Democratic control in Washington each has its own positives and negatives for the health-care sector.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. Health care has been a hot topic of debate this election season. I'm here today with Matt Coffina; he is a senior equity analyst at Morningstar. He is going to share his thoughts with what a Republican or Democratic victory would mean for health-care firms.

Matt, thanks for talking with me today.

Matt Coffina: Thanks for having me, Jeremy.

Glaser: Let's start off with what's probably the biggest question which is, what's going to happen to the Affordable Care Act, sometimes called Obamacare, depending on the outcome of this election?

Coffina: Well, if President Obama is re-elected, it's actually a pretty straightforward answer. We expect the law to be implemented as intended. A lot of the major provisions take effect in 2014, which would include expansions of the Medicaid program and subsidies for people to purchase insurance if they make less than a certain amount.

Now, if Mitt Romney were elected, the picture is considerably more cloudy. Although he has promised to repeal the Affordable Care Act, that's really easier said than done. If the Republicans have a majority in the Senate, at least 50 votes in the Senate, they would be able to use reconciliation. They wouldn't be able to get past a Democratic filibuster, but they could use reconciliation to pass any changes that were directly related to the budget. That would affect almost everything in the law, but it would exclude certain important provisions like the individual mandate and regulations of insurance companies, in particular the requirement that they offer a policy to any applicant and that they cannot change premiums based on one's health status.

And then if the Republicans were to win the presidency, but not gain at least 50 votes in the Senate, that complicates things even further. In that case I would expect President Romney to really have to rely on his regulatory discretion. And the law did leave a fair bit up to the Department of Health and Human Services to sort of impact the law, but in a way that would be a little unpredictable in terms of what provisions he could actually have an impact on.

Glaser: Looking across the health-care landscape, which firms would be winners under an Obama victory, and who would be some of the winners in a Romney administration?

Coffina: Generally speaking, we expect pharmaceutical and biotech companies and medical device manufactures to fare relatively well under a Republican administration or Republican controlled Congress. That's because the Republicans are less likely to emphasize price controls in Medicare and Medicaid, and they can also potentially provide some relief from the industry fees that were included in the Affordable Care Act.

On the other hand, life-sciences companies would likely fare better under the Democrats who are less likely to cut government funding in particular to the National Institutes of Health. Also health-care providers, especially hospitals, are really looking forward to the expansion of insurance coverage under Obamacare, and they would be worse off if that didn't occur under Republican administration.

Read Full Transcript
{1}
{1}
{2}
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
{1}
{5}
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article
    Username: