Insurers May Be Breathing A Bit Easier As Odds Improve On Federal Obamacare Payments

Investors with positions in the health care sector may be able to breathe easier, despite the Republicans’ failure to repeal Obamacare and President Donald Trump’s threats to withhold cost-sharing reduction payments from issuers.

Events in the past week make it seem much more likely that the payments will go through — if not on schedule, then retroactively — according to Height Securities analyst Stefanie Miller.

The White House: Moderation Before A Fresh Headache

General John Kelly, the new White House chief of staff, could prove to be the moderating force Washington expects him to be, but a more meaningful signal of restraint is the recent decision to seek legal counsel on the matter, lengthening the decision timeline beyond this week as previously stated.

The move is an indication that “they will make a decision based with policy in mind, not solely politics,” Miller said in a note. 

Also at hand is a Tuesday ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which granted states and insurers the power to sue the Trump administration for withholding CSR payments.

With so many other sides and issues to contend with already, Miller doubts the White House would want a fresh set of legal poundings to add to its health care headache. 

Related Links: Special Counsel Mueller Digging Deeper Into Russia, Trump And The Money Trail

Congress Would Make Corrections

If the administration did go through with Trump’s tweeted threat and withhold the payments, Congress would most likely “make those payments as part of a planned market stabilization bill in September,” Miller said. 

Members of Congress, state officials nationwide and the insurers themselves have demonstrated strong support for making the CSR payments to stabilize the market through 2018.

Senate HELP Committee Chairman Lamar Alexander, a Tennessee Republican, and Ranking Member Patty Murray, a Washington Democrat, made clear the bipartisan nature of the effort by committing to hold hearings and pass stabilization measures in September.

They have an “explicitly stated goal of appropriating CSR payments for at least one year,” said Miller.

Congress has several “must-pass” bills coming up in September which could take a CSR funding guarantee as a rider.