The possible enactment of a Trumpcare plan, following last week’s U.S. House of Representatives vote to approve the American Healthcare Act, would likely have a minimal negative effect on the medical device industry – and repealing Obamacare might even provide a bit of tailwind.
The House voted May 4 to repeal major parts of the Affordable Care Act and replace it with a Republican plan, on a 217-213 vote that saw 20 Republicans break ranks. The bill now is on hold while the Senate comes up with its own bill; the 2 would then have to be reconciled to clear both chambers before being sent to the White House.
The House measure would give states the flexibility to opt out of mandatory coverage for pre-existing conditions and the community ratings provision regardless of pre-existing conditions. It would create an $8 billion fund to cover states that opt out of the pre-existing conditions rule.
Analysts at Leerink Partners said that winning support in the Senate turns on pre-existing conditions. Drumming up public support for a plan that excludes coverage for pre-existing conditions just before the midterm election season is a dicey prospect, they wrote today in a note to investors.
“With the midterm election races kicking off later this year, senators from moderate states will be pressed toward the middle in their approach to healthcare legislation,” they wrote. “The fact that Senate GOP leadership feels the need to initiate its version of ‘repeal and replace’ with a blank page indicates to us that the 2 bodies are far apart indeed.”
Analysts Rich Newitter and Danielle Antalffy said that the impact on medtech is likely minimal, as the sector didn’t see much gain from Obamacare in the 1st place.
“Most company management teams have held that ‘on the way into’ ACA there was no tangible/measurable inflow of patients and that ‘on the way out’ they would not expect any major impact on procedure-driven business (i.e. gen supplies tied to overall healthcare utilization, ortho procedures). More acute care disease state products (i.e. within cardio, trauma) would be even less affected,” they wrote.
One potential impact is a drop in procedures volumes as Medicaid patients who gained coverage under Obamacare would no longer have insurance. But another hypothetical holds that procedure volumes could increase, albeit temporarily, Newitter and Antalffy wrote.
“It is possible there could be a temporary lift, or pull-forward, in overall patient volumes (which would likely get followed at some future point by a fall-off) should people – out of fear or uncertainty of what their healthcare situation will be going forward – opt to consume their insured healthcare earlier vs. later. Our survey work so far has picked up on very minimal evidence of this phenomenon; however, if the ACA repeal/replace actually begins to feel more like a reality vs. a concept (i.e. moving towards actual concrete legislation) it’s possible this latter trend could begin to (albeit likely temporarily) lift volumes more meaningfully nearer-term,” they wrote.
Another theory holds that hospitals might be chary of large capital investments in the face of uncertainty about patient volumes and demand, although their surveys show no trend in that direction.
“Our survey work and diligence to date in this area has not picked up on any big shift in hospital administrators’ planned spending for 2017 and/or decision making process, at least not specifically related to ACA repeal & replace uncertainty. In fact the feedback has suggested that administrators have generally been moving full-steam ahead with their cap-ex budget plans set late last year or early this year,” Newitter and Antalffy wrote.