GOP healthcare proposals "unlikely to amount to much in near-term" - Raymond James

Investing.com - Efforts by U.S. Republican lawmakers to expand the use of accounts to put away money tax-free for healthcare expenses are unlikely to "amount to much in the near-term," according to analysts at Raymond James.

Earlier this month, President Donald Trump argued that money now being spent on Affordable Care Act subsidies should instead by sent back to American consumers.

"I am recommending to Senate Republicans that the Hundreds of Billions of Dollars currently being sent to money sucking Insurance Companies in order to save the bad Healthcare provided by ObamaCare, BE SENT DIRECTLY TO THE PEOPLE SO THAT THEY CAN PURCHASE THEIR OWN, MUCH BETTER, HEALTHCARE, and have money left over," Trump said in a Truth Social post.

Although Trump did not include further details about the policy, some GOP members and think tanks have floated similar changes.

Senator Bill Cassidy (R-LA) has suggested implementing pre-tax employer-sponsored flexible spending accounts into federal health exchanges. The shift would effectively send tax credits under the Affordable Care Act -- known informally as Obamacare -- to consumers rather than insurers, which is the current arrangement, the Raymond James analysts said in a note.

The conservative Paragon Health Institute, meanwhile, has proposed allowing enrollees who qualify for ACA subsidy money to put some of these funds into health savings accounts, which typically have lower premiums but higher deductibles.

According to Politico, economists and policy experts believe Trump and GOP lawmakers are considering these proposals as alternatives to enhanced ACA subsidies due to expire at the end of the year. Without them, millions of Americans could see a steep jump in health insurance costs in 2026.

Democrats, who have repeatedly called for an extension of the subsidies, and Republicans only recently broke an impasse over the matter that led to the longest-ever federal government shutdown. Although the funding deal does not include the extended subsidies, a vote on the issue is likely to be coming in December.

For financial markets, observers have suggested that health insurers are likely to be hit by the end of these subsidies, which were put in place during the COVID-19 pandemic. Earlier this week, shares of Centene, Molina Healthcare, and Elevance Health fell on news of the shutdown breakthrough.

"The looming expiration of the ACA enhanced premium tax credits has left some to wonder what Republicans may propose and how likely those proposals are to become law," the Raymond James analysts including Chris Meekins wrote.

However, they predicted such GOP-backed changes are unlikely to soon lead to "actual action" because many lawmakers in the party "have not fully vetted policy proposals in these areas."

"When these types of major changes are considered, there usually needs to be time to socialize the idea to get members comfortable. There is just not time between now and year-end," the analysts said.

"Additionally, we do not think Democrats are likely to be supportive of the more aggressive proposals Republicans may put forward."