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Trumpcare Is Dead…Or Is It?

Posted May 11, 2017

Talat Imran
Talat Imran

             The first bill designed to repeal and replace the Affordable Care Act, one of President Trump’s campaign promises, failed to gain enough support from both sides of the aisle. With the new MacArthur Amendment finally driving the bill through the House, everyone is now wondering whether health insurance will change. Over here at VentureHealth, we’re wondering too—and what it could mean for the future of healthcare investing.

            The amendment to the AHCA, negotiated between the centrist Tuesday Group and the right-wing Freedom Caucus, cuts back on protections for people with pre-existing conditions. It also waives the essential health benefits provision of Obamacare. This will mean lower premiums for the healthy, but more people losing their insurance.

            If the Senate adopts a similar bill (which seems unlikely) will this new healthcare legislation change investment strategies? At this point, more people than ever are insured because of Obamacare’s individual mandate. Even the sickest and most costly patients can’t be denied coverage. Having more patients to treat places a premium on efficiency and productivity, making an ideal market for technologies like healthcare IT. In fact, healthcare IT has enjoyed a boom in the Obamacare years that may diminish if the act is replaced with one that guarantees loss of coverage.

            Other Obamacare requirements also primed the market for certain innovations. The provisions that protect people from re-hospitalization fees and hospital-acquired infections may affect the investing landscape if they’re repealed. Companies that create technologies to solve these kinds of problems are relevant only so long as hospitals face penalties in those situations. It’s possible that if the new healthcare bill is passed, both the provisions may be repealed.

            It seems like technologies that make modest improvements in patient care could be most affected by new healthcare legislation. Incremental innovations in healthcare IT and streamlining hospital function depend on having a large number of insured people in order to be profitable. That’s not to say those companies will cease to be important. But their relevance does depend on legislative decisions that could change how people access healthcare.

What won’t change are the big problems. Cardiovascular health, cancer, diabetes, obesity, and so on: these are big-market health problems that need solving and will not go away anytime soon. Disruptive innovations in markets that affect millions of people will always be relevant, no matter what bill is introduced. Even if Obamacare is repealed and replaced with the new version of the AHCA, heart disease will still be the #1 killer of Americans. That much is certain.

That’s why we try our best at VentureHealth to invest in ideas that address our endemic health problems. We can’t predict the future of health insurance over the next four years. But we do know that technologies that dramatically change patient outcomes and become the new standard of care will always yield big returns. 

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