- Political uncertainty from the historic impeachment trial of President Donald Trump and what's sure to be a contentious presidential election in November won't throw cold water on U.S. healthcare investment, Fitch Ratings said in a new report.
- Despite the potential for regulatory change late in the year, the outlook for healthcare products and services remains strong and the frenetic pace of mergers and acquisitions is unlikely to slow, though the scale of megadeals seen in recent years may ebb, according to the agency.
- Outside threats to pricing power will continue to spur consolidation both vertically and horizontally, Fitch predicts, though it's likely M&A will be weighted toward the first half of the year as the election throws a wrench in the timing for raising capital.
It's difficult to get a lot done during a typical presidential election year, especially when the incumbent is known for his unpredictability. However, healthcare experts don't think any earthquakes from the White House will noticeably shake the healthcare industry.
Though "policy-making activity is important to the long-term outlook for sector cash flow ... we do not expect current uncertainty to upend strategic investment," Fitch Ratings analysts wrote in the Thursday report.
Megamerger activity that characterized the past few years is likely to slow as giant deals like Allergan-AbbVie, Bristol Myers-Celgene and CVS-Aetna tie up loose ends and finalize their mergers. Though analysts don't predict any more major tie-ups, the steady flow of midsize transactions will likely continue.
Payers and providers have gotten a reprieve in recent months as progress on healthcare proposals around surprise billing and drug pricing have stalled by lobbying as well as heightened attention on impeachment.
A final vote on House Democrats' efforts to oust President Trump from office over the Ukraine controversy could come as early as late next week, just prior to the Iowa caucuses.
Still, progress on healthcare proposals "remains possible before the November election as political parties may be incentivized to demonstrate a win on healthcare to voters," Fitch researchers said.
The Democratic field is being winnowed down as the November election approaches, and a majority of voters across multiple surveys say healthcare is their top policy issue.
Former Vice President Joe Biden backs a moderate option of expanding public health insurance and building on the Affordable Care Act, while Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., both support sweeping "Medicare for All" proposals to create one single-payer system.
Momentum behind Medicare for All has slowed amid an estimated $34 trillion in federal spending estimated over a decade, according to the Urban Institute. Proponents of the plan argue it will lower costs by eliminating premiums, co-pays and deductibles.
But the idea is seeing some support from doctors: The second-largest physician group in the U.S. endorsed Medicare for All on Tuesday, arguing it would reduce administrative burden and free up more time and resources for patient care.