Republican control of the White House and Congress will likely result in the repeal and replacement of the Affordable Care Act (ACA), according to Fitch Ratings.
Donald Trump’s shock victory in the US presidential election on 8 November, coupled with the Republican Party’s majority in both the House of Representatives and the Senate, will allow him to quickly deliver on the key policy pledge.
Prominent Republicans have promised action in Trump's first 100 days in office, which he will take up in January 2017.
“The implications of an ACA repeal are relatively predictable but the effects of the replacement legislation are much less so,” Fitch said in an update for insurers.
“Republicans will likely balance their interests in meeting campaign promises to repeal the act while not alienating voters who had historically been uninsured prior to the ACA's implementation.”
Repealing the ACA could enhance insurers' underwriting flexibility and give rise to more varied product design, as well as pricing capabilities that reduce adverse selection risk in the individual and small group markets that resulted from provisions of so-called Obamacare.
“While these changes would cut across the entire health insurance market, financial results of insurers currently offering products on the ACA's health insurance exchanges are most likely to benefit from these changes. Generally, these insurers are more likely to be non-profit insurers.”
“Repealing the ACA is also likely to result in significant operational changes as insurers face the need to design new products, alter provider networks and adapt systems capabilities to meet the needs of current market dynamics. Fitch believes that insurers have proven capabilities in adapting to regulatory changes that mitigate these operational concerns.”
“Depending on the manner in which the ACA is replaced, for-profit insurers who have announced large scale withdrawals from the health insurance exchanges in recent months could be drawn back into the market for individuals currently covered by exchange-related products. The extent to which these companies return will rely heavily on the manner in which their concerns about structural issues are addressed.”
