Health care investing in a ‘post-Obamacare’ world

President Trump announced on October 16 that the Affordable Care Act, commonly known as Obamacare, is “dead.” How should investors interpret this new level of uncertainty introduced into the health care system? First, it’s important to clarify that Obamacare is still the law of the land and that taxpayers will pay a penalty if they do not have insurance as the law mandates. But the law has been thrown into disarray, to be sure. Here’s how. Last week, Trump signed an executive order bolstering short-term insurance policies, and later that day announced the end of $7 billion in cost-sharing subsidy payments to health insurance companies. Bipartisan congressional efforts to fix the subsidy program notwithstanding, this is expected to raise premiums in the individual insurance market and have untold effects on industries in the health care sector, which makes up one sixth of the U.S. economy. Hospitals and insurers could take a hit On a structural basis, this news looks bad for hospitals first. Hospital groups could see their bad debts go up if more people opt for “skinny” plans, and traffic could be driven lower very quickly. If behavioral health, substance abuse care, and other essential health benefits are not