November 7, 2018 / 10:41 PM / 10 months ago

Breakingviews - Obamacare roots grow too deep to dislodge

People demonstrate for the Affordable Care Act and against Trump during the First Stand Rally in Newark, N.J., U.S. January 15, 2017. REUTERS/Stephanie Keith

NEW YORK (Reuters Breakingviews) - Obamacare’s roots are growing too deep to dislodge. The Democratic Party wrested back control of the House of Representatives on Tuesday, thus effectively ending Republican hopes of overturning former President Barack Obama’s healthcare reforms. Even voters in heavily Republican states are warming to the law.

Republicans don’t like Obamacare, officially known as the Affordable Care Act, which has provided healthcare coverage to about 20 million people. But they could not agree on how to replace it, despite controlling both chambers of Congress and the White House for the past two years.

House Democrats are likely to use their newfound power to try to expand coverage, rather than limit it. That’s despite having a slim chance of success: The rival Grand Old Party still holds sway in the Senate and the White House.

That effectively ensures a stalemate, which is good news for the healthcare industry. Obamacare has meant more policies being written by insurers, fewer unpaid bills at hospitals, and more written prescriptions. The stocks of the nation’s biggest for-profit hospital, HCA Healthcare, biggest health insurer, UnitedHealth and biggest drug company, Johnson & Johnson, hit all-time highs on Wednesday.

This situation won’t last forever. The number of states that have expanded coverage of Medicaid under the law has steadily increased; dyed-in-the-wool Republican states Idaho, Nebraska and Utah opted to expand coverage at the ballots on Tuesday. That leaves just 14 states that have not chosen or voted to increase health benefits. Once people acquire health insurance, they tend to want to keep it – making it politically harder to disassemble.

Healthcare now accounts for 18 percent of America’s GDP and spending per person is twice as high as in other developed countries. Yet comparable metrics like life expectancy and maternal death rates aren’t favorable and provision is spotty – and the United States is the only country in the group without universal healthcare.

Whether to end this example of American exceptionalism – and its accompanying outsized spending and high margins for providers – may become one of the biggest topics for debate in the runup to the next congressional and presidential elections in two years’ time. That prospect should have the healthcare industry running scared.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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