Some prominent U.S. fund managers are betting that the Patient Protection and Affordable Care Act (PPACA) will not undergo the drastic changes that President Trump promised on the campaign trail, according to a Reuters report. Fidelity, Gamco, Thornburg, and other major portfolio managers say they see the broad outlines of the PPACA remaining intact despite Trump’s signing of an executive order that sought to weaken it.
“They may do enough to try to rebrand it as Trumpcare, but I just don’t think it will be that dramatically different from what we have today,” portfolio manager Jeff Jonas, of Gamco Investors in Rye, New York, told Reuters.
Trump’s order directs government departments to “waive, defer, grant exemptions from, or delay the implementation” of provisions of the PPACA that impose fiscal burdens on states, companies, or individuals, but provides no details.
Although repealing the act requires only a majority in the Senate, replacing it would require at least 60 votes, meaning that Republicans would have to win some Democratic support. As a result, fund managers said they expect only incremental changes.
A repeal without a replacement could put pressure on hospitals by rescinding the Medicaid expansion and individual subsidies, prompting more individuals to go without insurance and to be unable to pay their hospital bills, according to the Reuters report.
Representative Tom Price (R-Georgia), Trump’s nominee for health secretary, said in a recent hearing that the administration will initially focus on individual health plans sold on PPACA exchanges and is not interested in “pulling the rug out on anybody,” although he said the administration would also focus on Medicaid.
“I don’t think the new administration wants to get bogged down in health care, and they want to move on to immigration and tax reform and bigger policy items,” said Eddie Yoon, portfolio manager of the Fidelity Select Heath Care fund in Boston. “I don’t anticipate that there will be a whole lot of disruption.”
Connor Browne, a portfolio manager with the Thornburg Value fund in Santa Fe, New Mexico, also feels that little will be done to change the health care act.
“While it hasn’t so far paid to underestimate Donald Trump, it sure seems like we might be seeing indications that he doesn't understand how hard it will be to get legislation done,” Browne said.
Source: Reuters; January 24, 2017.