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Pelosi Bill May Try to Shore Up Obamacare Exchanges

Pelosi Bill May Try to Shore Up Obamacare Exchanges

(Bloomberg) -- Health insurers are at session lows ahead of House Speaker Nancy Pelosi’s plan to release “sweeping” health-care legislation today that will target shoring up the Obamacare exchanges as well as the high costs of drugs.

Democratic plans expected to be announced later this afternoon would follow last night’s filing by the Trump administration’s Justice Department, which is now arguing that the entire Affordable Care Act should be thrown out ahead of the 2020 election.

Health insurers in the S&P 500 fell as much as 2.5 percent Tuesday, pushing their three-day decline to more than 4.5 percent. They slid Monday in anticipation of Pelosi’s bill.

Veda Partners health care policy analyst Spencer Perlman called the DOJ’s about face “a stunning and politically tone-deaf move.” The most likely scenario is that the law stays as it is, with a 5 percent chance that it’s struck down, according to Perlman. Meanwhile, he said Pelosi’s bill “is designed to be a ballast and counterweight against the push for Medicare-for-All within the Democratic Caucus.”

Democrats will also address drug pricing in the bill and some of those plans -- like addressing pay-for-delay drug deals -- may already have bipartisan support, but there’s more to be gained ahead of the election by not letting one side win, Perlman said in a phone interview.

Pelosi Bill May Try to Shore Up Obamacare Exchanges

Bloomberg Intelligence analyst Brian Rye also sees the plan as “a pitch to voters,” saying there’s very little chance anything will be enacted this year.

Provisions in the Democratic legislation may be most positive for Centene Corp., Molina Healthcare Inc. and, to a lesser degree, Cigna Corp.; however, Cowen analyst Charles Rhyee expects such a bill would pass the House but fail in the Senate. “While the market is sensitive to healthcare-related news coming out of D.C., this shouldn’t be one of them,” Rhyee told clients.

“The DOJ change, which aligns it with the position of the Republican attorneys general who filed the suit, does not alter the appeals process and does not” -- according to Evercore ISI analyst Michael Newshel -- “alter the likelihood that the ruling will ultimately be overturned and the ACA maintained intact.”

To contact the reporter on this story: Cristin Flanagan in New York at cflanagan1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper, Jeremy R. Cooke

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