Thus far in action on Monday, shares of select hospital/healthcare related names trade higher in reaction to news out late last week/early weekend that President Donald Trump’s American Health Care Act (AHCA) – the likely replacement to former President Barack Obama’s Affordable Care Act (dubbed Obamacare) – was defeated before it came to a vote.
Late this past Thursday (March 23), House Speaker Paul Ryan (R-WI) reportedly postponed his AHCA press conference until further notice, beginning the unraveling of President Trump’s plan to repeal and replace the ACA.
Immediately following this news, on Friday morning, President Trump issued an ultimatum to Congress that if AHCA did not pass, he would move onto tax reform. Then, as Friday progressed, the US House of Representatives passed a procedural vote (230-194) to clear the AHCA for debate on the floor as a final vote was expected around 5 p.m. Friday. This all led up to the aforementioned pulling of the AHCA by Speaker Ryan, and has led to some decent gains in the biotech and hospital sectors on Monday.
President Trump previously said he would add provisions to AHCA to allow the government to negotiate for drug prices. With the AHCA now dead, the future of said provisions are in doubt which would be a positive for the biotech space (IBB).
As it stands today, Speaker Ryan said that Obamacare will remain the law of the land for the foreseeable future. So you may ask, what’s next? Well, Congress and the President will now move onto the hotly debated subject of tax reform. The main point of the debates will likely be border adjustment tax, which if enacted will be negative for the retail sector (XRT). Freedom Caucus Chairman House Rep Mark Meadows (R-NC) in a previous interview with Axios said he is against the measure. Remember, it was the conservative Republican Freedom Caucus that effectively blocked the AHCA.
Related biotech/healthcare names trading higher in reaction today: THC +7.07%, HCA +5.38%, CYH +4.72%, UHS +4.19%, MOH +3.94%, CNC +2.58%, LPNT +2.66%, IBB +0.67%, XLV +0.15%.