Hospital stocks fell sharply Wednesday on expectations that Donald Trump will follow through on campaign promises to revoke the Affordable Care Act, which has helped hospitals by increasing the insured population.
But two local health system chief executives said it will be hard do away with the landmark 2010 law, especially because Democrats retain the power of the filibuster in the Senate.
"Governing is a lot more difficult than being on the campaign trail," said Alan Miller, chief executive of Universal Health Services Inc. in King of Prussia and one of the nation's largest publicly traded hospital owners.
"Look, the ACA has added coverage for 20 million people. That's good. It's good for the 20 million people, and it's good for our industry. I don't think that's going to be easily undone, nor should it be," Miller said.
Miller said he was not worried about UHS's stock price, which was off as much as 18 percent before recovering to close down 7 percent, at $119.26, on the New York Stock Exchange.
Other publicly traded hospital companies with Philadelphia-area operations were harder hit. Shares in Tenet Healthcare Corp., which owns Hahnemann University Hospital and St. Christopher's Hospital for Children, closed down 25 percent. Community Health Systems Inc., which owns six hospitals in the region, lost 22 percent of its value.
Ralph Muller, chief executive of the nonprofit University of Pennsylvania Health System, the region's largest, said the troubled ACA insurance marketplaces were the most vulnerable under a Trump administration.
"They needed some fixing or tweaking, so if he decides to repeal and replace, the question is what he is going to repeal and replace with. With 11 million people there, my guess is they don't want to just drop those people totally," Muller said.
Even without congressional support, "there are some ways a new administration could through neglect try to undermine the sustainability of the program," said David Grande, who is director of policy at the University of Pennsylvania's Leonard Davis Institute of Health Economics. For example, Trump could choose not to promote insurance coverage under the ACA as much as the Obama administration has, Grande said.
"There are other big changes that have to go through Congress, and that's where there is a lot more uncertainty and certainly the time line is much, much longer," Grande said. Changes to subsidies could pass without Democratic support, but changes to coverage rules, for example, would have to clear the 60-vote filibuster hurdle, he said.
While hospital stocks were hammered, pharmaceutical shares went in the opposite direction, as a repeal of the ACA could remove the latent threat on price controls on drugs. Shares in AmerisourceBergen Corp., the Chesterbrook-based drug wholesaler, gained $6.58, or nearly 10 percent, to close at $75.61. Merck & Co. Inc. and Pfizer Inc., which have significant operations in Montgomery County, also posted strong gains.
More broadly, the outlook for the region is negative, said Mark Zandi, chief economist at Moody's Analytics, in West Chester.
"The Philadelphia economy will be diminished under most scenarios. There are lots of potential policy cross currents, but less global trade and immigration are likely, which will weigh most heavily on the region," Zandi said. "There are some potential pluses, including corporate tax reform and more infrastructure spending, but the economic negatives will outweigh any positives."
On the trade front, life could get harder for Philadelphia firms that manufacture products abroad for U.S. consumption. Trump has said he would rip up international trade deals, such as the North American Free Trade Agreement.
Trump cannot do that without Congress, but if he got his way, that could unleash a trade war, plunge the U.S. economy into recession, and cost more than four million private-sector jobs, a September report by the Peterson Institute for International Economics said.
The impact would be significant in the Philadelphia region, where exports have grown almost three times as fast as the region's economy, according to an April report by Economy League of Greater Philadelphia.