<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=343345&amp;fmt=gif">

Affordable Care Act & Value Based Reimbursement

03.10.2019 | Ben Phillips, CFA

ACA Blog Post Image

The Policy in Focus series highlights a new policy driven investment theme (legislation or regulation) our team is monitoring. You can subscribe to the Weekly Market Recap to receive this report each week and visit www.EventSharesFunds.com for our investment solutions. 

 

Login to Library ➔

 

Subscribe to weekly

 

 

Background: Affordable Care Act & Value Based Reimbursement

 

A Texas judge recently ruled the Affordable Care Act (ACA) is unconstitutional. This introduced uncertainty into health insurance and will likely lead to a multi-year appeals process. The judge elected to keep the insurance exchanges and law in place while the issue is appealed. The Trump administration and Republican governors are beginning to look at expending Medicaid/ Medicare, which may increase the insured populations in those government health insurance programs. Health tech firms focused on increasing efficiency by improving patient outcomes and lowering costs may increase revenue as the healthcare sector moves to a value based reimbursement system.

 

 

Our Take & Timing: The Opportunity

 

The ACA continues to be a significant policy priority. Since its passage in 2010, the ACA has been the subject of both legislative and regulatory changes. In our view, the volatility presents trading opportunities. As a result, we believe investors may being overreacting to the recent Texas court ruling. In the hospital industry, the big story is the move from fee for service to value based reimbursement. This will likely pressure hospital margins in the short-term, with the question being how long the transition will take. To transition to value based reimbursement, hospitals will need to track their patient populations and a wide variety of quality measures (e.g. 30 day readmissions, patient outcomes). This will require increased investment in healthcare technology to efficiently monitor quality.

 

 

LEARN MORE: This research is a byproduct of our active ETF.

 

 

Charts: Trading Range & Relative Performance

 

ACA Stocks Chart  

 

Impacted Companies: Stocks to Watch

 

  • Hospitals: HCA Healthcare (HCA), Universal Health (UHS), Encompass Health (EHC)
  • Health Insurers: Molina Healthcare (MOH), Centene (CNC), WellCare Health (WCG), Humana (HUM)
  • Healthcare Tech: Cerner (CERN), Teladoc Health (TDOC), ASGN (ASGN), Allscripts Healthcare (MDRX), Omnicell (OMCL), Vocera (VCRA), Evolent Health (EVH), Tabula Rasa (TRHC)
  • EventShares manages a portfolio of our best ideas.

 

 Subscribe to weekly

 

 

About EventShares

 

EventShares is an investment management firm dedicated to translating legislation and regulation coming out of Washington D.C. into real world investment solutions. The firm's goal is to provide its clients with attractive, long-term results by following a disciplined and differentiated approach to investing.

Headquartered in Newport Beach, CA EventShares serves individuals, financial advisors, as well as institutions and offers its sophisticated investment strategies through active ETFs and separately managed accounts (SMAs).

 

Fund Site ➔

 

 

If you like this research report, visit www.EventSharesFunds.com to learn more about our portfolio solutions. 

Subscribe to our Newsletter

New Call-to-action

Related posts:

Important Information

Active Weighting Advisors LLC ("AWA") is an SEC-registered investment adviser that manages ETFs under the brand name EventShares Funds. The opinions expressed herein are those of AWA as of the published date and are subject to change. It is provided as general market commentary only, and it does not consider the specific investment objectives, financial situation or particular needs of any one client. The comments may not be relied upon as recommendations, investment advice or an indication of trading intent. AWA is not soliciting any action based on this document. Investors should consult with their own financial adviser before making any investment decisions. 

There is no guarantee that any future event discussed herein will come to pass. The information herein was obtained from various sources, which we believe to be reliable, but we do not guarantee its accuracy or completeness.Returns assume no management, transaction or other expenses and no reinvestment of dividends, interest and/or capital gains. Past performance does not guarantee or indicate future results.

Investing involves risk, including the possible loss of principal and fluctuation of value. AWA disclaims responsibility for updating information. In addition, AWA disclaims responsibility for third-party content, including information accessed through hyperlinks.