Investors certainly seem to like what they see from the new Senate health care bill. Shares of a number of high-profile insurers, pharmaceutical companies and hospitals traded higher on Thursday after the Senate revealed the details of its Affordable Care Act replacement.
Key provisions of the Senate bill are mostly in line with the initiatives of the House’s American Health Care Act. The Senate plan includes dramatically scaling back federal Medicaid funding, significantly reducing premium insurance subsidies for low-income Americans and eliminating tax penalties for uninsured Americans.
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The bill also allows insurers to raise the maximum rates they charge older Americans to up to five times the rates they charge younger customers. Under the ACA, that ratio was capped at three times the rate.
The Health Care Select Sector SPDR Exchange-Traded Fund (ticker: XLV) climbed 1.1 percent on Thursday and is now up 4 percent in the past week. The iShares Nasdaq Biotechnology Index ETF ( IBB) also gained another 1 percent to bring its total weekly gain to 8.6 percent.
Insurance stocks traded higher on news that cost-sharing subsidies for low-income Americans won’t be eliminated for at least another two years under the Senate plan. Anthem ( ANTM), UnitedHealth Group ( UNH) and Humana ( HUM) are all up more than 2.6 percent in the past week.
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Some of the biggest health care winners on Thursday were hospital stocks. Molina Healthcare ( MOH) was up 2.2 percent, HCA Holdings ( HCA) was up 2.4 percent and Acadia Healthcare Co. ( ACHC) was up 4.7 percent on the day. Hospitals could potentially lose millions of customers if insurance coverage is reduced.
The unveiling of the Senate bill is just the first step in what may be a difficult road ahead for Congressional Republicans. The next step in the process will be a report from the Congressional Budget Office early next week on the potential cost and impact of the new bill. The CBO found that the House’s AHCA would leave 23 million fewer Americans uninsured.
Finally, Republicans must secure the necessary votes to pass the bill. Three Republican Senators currently oppose the bill, according to CNN, which could potentially leave Republicans one vote shy of passage.
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The unpopularity of the House health care bill puts Senate Republicans in a difficult spot. A Wall Street Journal/NBC News poll recently found that the ACA now has a higher approval rating among Americans than the GOP House bill to replace it.
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Wall Street Approving of Senate Health Care Reform Bill originally appeared on usnews.com
