Obamacare As We Know it May be Done For

Donald Trump promised that one of the first things he will do as president is to repeal Obamacare.

Now, analysts and health-care industry officials are taking stock of how the reality of abolishing the Affordable Care Act could play out in Washington under a Republican White House and Congress.

It wouldn't take much for Congress and a Trump administration to overturn the ACA, said Leerink analyst Ana Gupte.

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"Through budget reconciliation, it is possible for them to repeal and replace the bill entirely" by cutting funding to key parts of the health-reform law like premium subsidies, Gupte said. "They could choke off the blood supply to Obamacare."

In a note to clients, RBC analyst Frank Morgan said: "The impact of a Trump win would likely inject an unhealthy dose of uncertainty" for the health-care industry.

That's an understatement. Until Tuesday, most analysts and health-industry leaders put very low odds on the possibility of the health-reform law being upended.

Now, the big question is how a repeal would be executed, particularly when it comes to the 12 million-person Obamacare exchange market.

"From an industry perspective, what is the definition of repeal?" asked Ben Isgur, health leader at PwC's Health Research Institute. "Trying to go through and find the thousands and thousands of pages of laws, regulations, laws rules and taking out every single one? Most people don't think that is a realistic path forward."

For insurers, the ramp up to Obamacare took time, and a switch to its replacement will be a major adjustment, Isgur said. "Many of these companies are like large ships — you can't turn them on a dime."

On Wednesday, insurer Aetna was trading 3.6 percent higher, while Humana gained 5 percent, likely on a hunch that a Trump administration would look on the companies' merger plans more favorably. But shares of insurance rivals such as Cigna and UnitedHealth Group were trading lower, and Obamacare Medicaid players such as Centene and Molina Healthcare getting hit the hardest.

Hospital stocks like Tenet Healthcare and HCA Holdings tumbled in heavy volume Wednesday, with Tenet recently down 24 percent and HCA shedding 14 percent. Hospitals in general have benefited from the greater numbers of patients being covered by some form of insurance that has occurred since the ACA went into effect.

In the first quarter of 2016, about 8.6 percent of Americans — or about 27.3 million people — were uninsured. That was first time the nation's uninsured rate fell below 9 percent.

A survey conducted by the federal Centers for Disease Control and Prevention suggested there are now 21.3 million fewer uninsured person than in 2010. Not all of the newly insured have received their coverage through Obamacare exchanges. Some have benefited other ACA provisions, such as expanded access to Medicaid in 31 states and the ability of children to remain on their parents' insurance plans until they are 26 years old.

A spokesman for the health insurance lobby, America's Health Insurance Plans said the industry is prepared to work with the new president.

"Every American deserves access to affordable health coverage," AHIP spokesman David Merritt said in a statement. "A competitive private market can deliver more choice, higher quality, and lower costs. We will work across the aisle — with every policymaker and the new administration — to find solutions that deliver affordable coverage and high-quality care for everyone."

One of the ways Trump has proposed to create more competition in the individual market is to allow consumers to buy insurance across state lines — an idea long embraced by Republican analysts.

Yet, that could prove as controversial and as complicated as Obamacare itself, says Dr. David Friend, director of consulting firm BDO's Center for Health Excellence and Innovation.

"I wonder constitutionally can they do it?" Friend asked. "Health care is a state regulatory issue. As a doctor I have to get a state license to practice medicine in each state. I think there would be a big fight."

When it comes to the pharmaceutical industry, Trump has spoken favorably about the idea of allowing Medicare to negotiate drug prices. The health insurance program for seniors is now prohibited from doing so by law.

Friend said Trump's unpredictability could give him leverage to get the drug industry leaders to roll back prices voluntarily rather than face new regulation.

"If you don't know what he's going to do," Friend said, "I would want to cut the best deal I could, and get out of there fast."

Pharmaceutical and biotech stocks broadly rallied Wednesday. The iShares Nasdaq Biotechnology ETF (IBB) skyrocketed, trading 7.5 percent higher. The gains were being supported by stocks such as Dow components Pfizer and Merck — which gained 6.8 percent and 5.5 percent, respectively — as well Allergan and Amgen, and many others.

Among them, Mylan, which has recently been at the center of the debate over drug prices, gained 5 percent. The company has been criticized for steep price hikes of more than 500 percent in recent years for its anti-allergy EpiPen devices.