Senate, Justice Ginsburg, Jim Farrell discussed on The CIBC Private Wealth Podcast
Welcome to our second podcast discussing the election and potential impacts on sectors. I'm Patricia bannan. Co portfolio manager of our disciplined Equity strategy and head of equities at CIBC private wealth Today will cover Healthcare and I'm joined by Jim Farrell portfolio manager and Senior Equity analyst covering health care for for CIBC. Private wealth. Jim should be we should start with a biting wind. Obviously. This would have a pretty big impact on the health care sector potentially. Can you discuss some of the most important and significant issues setting up, you know biding win is really been once viewed as something that could change the health care sector and the outlook for some of the companies within sector more than a by to win. I think what you have to also look as what happens with the Senate page. So in a situation where Biden wins in the Democrats win Senate if there's two areas really draw the Bose Focus that's drug pricing as well Managed Care is on the drug pricing front. I think you could see by didn't pay for in the Senate push horse. Most favored nation plan. That's where United States drug prices match those of the international markets. You could also see something where the administration pushes were limits on drug pricing. Inflation and then in a really extreme case you could even see the administration pushing the government directly negotiate with Medicare Part D plans. I think all these things are a little bit tough to actually push through even in a Democratic Senate and House as it would require votes from you know, some some senators or something that congressman who aren't necessarily as in favor of these measures to happen in particular those ones who are receiving lobbying dollars from the Pharma industry or fronting those companies whose districts represent are represented by people within the farming industry that cellphone we managed care. You know, that's potentially a bigger issue and So What by this is rejected a medicare-for-all position that was popular with a Bernie Sanders and Elizabeth Warren campaigns. He he sort of public option now the specifics around a public option or unclear. But in essence would be an insurance plan with lower reimbursement rates for hospitals. And in turn those would require lower rates to those who buy those plans wage. If who's eligible exact pricing and who runs that are on clear? Um, but I think at the end of the day these this would be a negative the Managed Care industry because it would either mean that you would have thought you were members within those managed care plans. So, you know losing profitability in that regard or you'd have a members at sort of lower margins wage those plans lower in the Medicare age to 60 is another potential thing that divided administration's talked about, you know, but again, that could actually be tough too to officially push through I'd be a big increase in terms of debt to the government. So I think ultimately, you know, you'll see a lot of rhetoric and you see a lot of conversations about some of these changes within managed-care the ultimate might be difficult to actually push these things through because even with a democratic majority in the house will have a number of number of represented sort of pushing back against these plans. I think the Republicans when the Senate even in a Biden presidential presidential scenario, I think a lot of these, you know initiatives around drug pricing as well managed care of, you know, certainly wouldn't go through the on top of it. They might even have a hard time even getting you know much traction at all. So I think in terms of that scenario, uh, you know, a lot of these drug companies and managed care companies would much prefer to see a Republican Senate at the end of day even in the event of a bite and went so there is it pretty safe to assume that the Trump when there are major changes. Yeah, you know, know Trump wins the election you I think you can mostly expect the status quo. And so from a drug pricing standpoint it while the president has talked about, you know lowering drug prices. I think that's a popular thing to stay on the political Trail. But again, it's going to be hard to implement a lot of these changes. You might see something like lower co-pays for drugs or some smaller things the margin but what all said and done I think the drug industry you pretty much see the status quo in terms of a trump win the presidency from Managed Care perspective. I think that's a positive for the Managed Care sector just because it sort of takes it off the table. I think, you know at that point, you know, the President Trump has been very much opposed to Medicare for all or even a public option. And so I think it's conversation just sort of ends right there after the election he wins the election. So is this wasn't all enough to digest with the passing of Justice Ginsburg. We have even more to digest now. How does this complicate Health Care issue? Yeah, so the Supreme Court is going to hear a case on the on the Affordable Care Act in November whether the upholder strike down the Affordable Care Act before church Justice Ginsburg passing was widely assumed that they the ACA would be held up based on how the votes would would play out in the Supreme Court based on you know, the opinions of number of legal experts. Yep. Sounds like the cord still will vote uphold the ACA when they decide that in November, but you know nothing's ever for certain. You know, I think just when you look at the scenarios if the log struck down that would be you know, a little bit of a headwind for hospitals as they lose sort of this pool patients that are currently insured as they would now no longer be insured that could you know impact they're dead..