Editor's Note: Below is an institutional research note written by Hedgeye Healthcare Policy analyst Emily Evans. For additional information about our institutional research email sales@hedgeye.com.
Labor Day marks the beginning of the end for 2016 presidential campaigns.
After Monday, most of the electorate will start to pay attention to the race in anticipation of casting their vote in November. Most of the issues and the candidates' views have crystallized to the point where the options are clearly discernable. In anticipation of the debates that will rage over next several months, we have constructed a couple of handy tables to help compare each of the party and candidate positions on health care issues. With the public exchanges morphing into something different from what the president or his party thought they would be and drug companies like $MYL exhibiting poor political judgment, you can bet health care will be a big part of fall campaigns.
Party Platforms. Political party platforms are certainly not what they once were. In the political days of yore, party platforms were hammered out at conventions and represented the goals and intentions of the party and its candidate. The platform consisted of "planks" that articulated the party's position on the issues of the day. Today, party platforms are more aspirational and, by design, more general. The planks articulate not so much the intended administrative and legislative ambitions of the party and its candidate as they give voice to the concerns and interests of the party's base of voters. Platform Committees tend to be made up of party regulars - what Trump and Sanders and their campaigns have referred to as "the establishment." As a result, party platforms do not tend to be very original or innovative.
The health care platform for both parties rely on the tried and true messages. Democrats would like to expand health insurance coverage and control premium prices while Republicans would like to see great use of market competition and consumer choice in the health insurance markets. On the issue of prescription drug prices, the parties take nearly opposite stances with Democrats urging the introduction of competitive forces while Republicans seek to reform the regulatory body that oversees approval of drugs for market. On the issue of Medicare and Medicaid, Democrats are quiet while Republicans see major changes to those programs. Table 1, below lists all the major elements of the health care plank included in both parties platforms and approved at their respective conventions.
(Click images below to enlarge or download all tables below here.)
Table 1:
Health Care "Planks" of Democrat and Republican Parties
Source: National Committees of the Democrat and Republican Parties
Campaign and House Republican Positions. The candidates' positions on health care issues offer an opportunity for more specificity as they expand on their party's platform. As it happens this election year, the Republican candidate, Donald Trump does not use the "positions" section of his website to offer much in the way of substance. Fortunately, House Speaker Paul Ryan (R-WI-01) had initiated - well before Trump was the nominee - a policy effort known as "A Better Way." The health care policy goals included in "A Better Way" offer more detail than that presented by the Republican nominee and presumably would make their way into the legislative and administrative objectives of a Republican president. We suspect, in fact, that support of the principles of "A Better Way" by Trump was a point of negotiation for Ryan's slow roll of an endorsement.
"A Better Way" also provides a good deal of insight into what the bargaining chips would be as a President Clinton attempts to execute on her policy goals. For example, as Clinton seeks to "defend and expand the ACA" she may find support if she is willing to consider greater flexibility for HSA accounts, to use one example. Another deal could be struck between funding the FDA's Office of Generic Drugs and reform of the agency. Table 2. below compares all the policy positions that are likely to impact investors. Included are potentially relevant tickers, if applicable. Issues that would likely to require Congressional action are in bold.
Note that the creation of a "public option" would likely not require legislation. A public option - a government funded or managed insurer that might be similar to state and federal flood insurance programs - is different from a single payer system. A single payer would mean all Americans or residents of a given state would purchase insurance through a, presumably government-run, entity. That government-run insurer would set reimbursement rates for all providers. Neither candidate has expressed support for a single payer system at this point.
Beginning in January 2017, states can apply for waivers to create their own mini-ACA. These "section 1332" waivers could include a public option - or in the case of Colorado, single payer - and would, assuming compliance with other parts of the law, gain the support of a Clinton Administration. How likely a state's political leadership is to include a public option will vary depending on the state. Insurers, who in recent years, have taken a political beating in Washington, still have significant influence in the state capitals.
Table 2:
Health Care Positions of Nominees Clinton and Trump and House Republicans
Source: Candidate and Speaker of the House of Representative websites
