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Executive Orders Bring Uncertainty for Healthcare Exchanges

For now, we’re not changing our valuations or moat ratings for the affected companies.

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Last week, President Donald Trump signed two executive orders that will materially change the landscape of the healthcare market. The first allows individuals and small businesses to purchase health insurance plans that offer benefits below current Affordable Care Act mandates and allows these entities to form group purchasing organizations.

The second immediately halts all cost-sharing subsidies for insurers that provide plans on the public exchanges. These subsidies were used by insurers to offer lower copayments and coinsurance to their members. These executive orders have weakened key pillars of the public exchanges and have built material uncertainty into the public exchange market.

Vishnu Lekraj does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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