• Investing replay

    HEDGEYE INVESTING SUMMIT

    SPECIAL HEDGEYE TV EVENT

    The sharpest minds in investing discuss the most important market and economic developments and their investing implications.
    Watch the free replay.

Takeaway: Healthcare has once again moved to the fore of the campaign due to COVID and threat to the ACA. No surprise, it took up a lot of airtime.

Editor's Note: This is a complimentary research note published by Healthcare Policy analyst Emily Evans. CLICK HERE to get COVID-19 analysis and alerts from our research team and access our related webcasts.

Evans: Presidential Debate Was Painful But Not Entirely Worthless - 04.19.2 17 bear bull politics cartoon  1

We are not much for debates. While a catastrophic or stellar performance by a candidate can occasionally turns the tide, usually debates serve the purpose of solidifying existing support with messages that have resonated in the campaign to date.

One of my favorite political tricks is when candidates send supporters into the field during a debate to canvas undecided voters while their opponent is occupied with explaining their policy positions to people who already know what they are.

Because debates are a conversation between the candidate and his/her fans, they offer a lot of insight into which policy points or messages are working for them. Admittedly, last night's performance by both candidates will not prove to be a highlight in American political history.

Still, worth remembering it could be worse. Theodore Roosevelt threatened everyone with a fist fight and Andrew Jackson challenged 100 men to a duel and killed one. The difference is no one live tweeted it.

Healthcare took up a lot of airtime which allowed us to draw a few conclusions:

Managed Care 

The fear that Biden, needing the left flank populated by a younger generation of leaders itching to take over the party, would veer toward Medicare for All and other policies that denote universal insurance coverage was not realized. In fact Biden stuck to his policy position of creating a public option and in a thirty pieces of silver moment pointed out he had beaten Bernie Sanders.

We doubt Biden is completely repudiating the Biden Sanders Unity Task Force Recommendations, which Trump referred to as a "manifesto," but it was not an encouraging moment for the Medicare for All Crowd. For his part, Trump's efforts to bait Biden into a public embrace of health care's most left leaning policies failed. Takeaway: Status Quo for Managed Care regardless of election outcome

Affordable Care Act 

Biden did a good job sticking to the main point that Republicans are challenging the law and have no replacement, helped a bit by the question's premise. Generally, Democrats have also done a good job of framing the issue as a "need" for a replacement, meaning another major legislative action.

Republicans reject this idea, hence the absence of a replacement, and instead have been advocating for moving the health system to one that is more market-based through a series of small efforts like more flexibility on site of service, price transparency and insurer flexibility.

Unfortunately for Trump and Republicans, they did a pretty poor job of explaining this last night and most other days. However, this strategy will have certain benefits. Namely, many of these changes disconnected from the ACA, may survive a change in leadership.

What will not survive a change in leadership is a SCOTUS decision to uphold the appeals court on the constitutionality of the ACA and remand to trial court for severability analysis and determination. While the ACA's impact on coverage has been mostly confined to Medicaid, the law is a powerful symbol for Democrats and a necessary policy toehold for expanding federal policy to universal coverage.

Takeaway: Status Quo for recent market-oriented policies, with possible modification to price transparency, but reversal through reconciliation or other means any court ordered changes to the ACA by a Biden Administration. 

Drug Prices 

The debate was astonishingly light on this topic that has pre-occupied the White House and Capitol Hill for three years. The president pointed to the Most Favored Nation Rule and accurately pointed out that no other president would have bucked the PhaRMA lobby. From what we understand the animus is mutual. Biden, who is getting overt support from the pharamceutical industry and has long been considered "someone we can work with" in the parlance of politics did not take the bait.

Takeaway: We expect Trump administration to finalize MFN rule before leaving office, leaving Biden in the tough spot of reversing it under pressure from the industry or letting it be implemented on the chance it has an impact on prices. 

COVID-19/Public Health Response 

Biden stuck with the party talking point of needing additional relief funds for schools and businesses to return to normal, full capacity operations. This strategy is being repeated from the local to federal political level but we are not certain it is resonating with parents trying to get children back to school. Hedgeye Macro analyst, Darius Dale and I have been calling the post-pandemic attenuated restrictions, #COVIDFatigue.

There is some concern that a continued slow-walk to restoration of commerce and assembly will lead to #COVIDAnger, which in the event of a contested election could make for a combustible combination. 

Trump countered this argument with his achievements especially on travel bans and return of football as well as the development of a vaccine and the negative consequences of a shut-down. It was probably one of President Trump's best moments of the debate, which is not saying a lot. 

Takeaway: We don't expect COVID to further alter health policy but sanctioning a continuation of restrictions could have significant social consequences.

We will be rolling out deeper policy coverage on the election mid-October and dive into all aspects of health policy under different election scenarios.