If President Donald Trump and Republican leadership in Congress fail to pass the American Health Care Act, analysts warn a market correction could be in store.
Investors believe if the health care bill stalls in Congress, Trump’s much lauded tax cuts and other pro-growth policies will either take a back seat until some version of health care reform passes, or will get greatly downsized. Thursday’s vote is essentially a litmus test for Wall Street to see when and if the president will come through with his economic platform. (RELATED: Markets Open Sluggish As Investors Await Repeal Vote)
The president has been adamant that he cannot move ahead with his pro-growth agenda until Republicans are able to “repeal and replace” Obamacare. Speaking at a rally in Louisville, Ky., Monday evening, Trump said: “We want a very big tax cut. But we cannot do that until we repeal and replace the disaster known as Obamacare.”
Stocks posted their single biggest one-day decline Tuesday since Election Day over concerns that health care reform would get shot down in Congress. Markets have otherwise been on a tear since Trump won, with the Dow posting 2,000 point jumps and the S&P 500 notching a string of record days in March.
The vote is expected for 7 p.m. Thursday evening, but last-minute negotiations between House conservatives and moderate Republicans late Wednesday night could postpone the vote.
Democrats are united in voting against the bill, claiming the legislation would leave millions without health insurance and raise premiums and health care costs more than Obamacare. Republicans can afford to lose 21 GOP votes, any more than that and the bill does not pass the House.
Recent conservative estimates put the number of defectors on the Republican side at around 26, but one senator thinks that number is too low. “I think we have 30 to 35 no votes in the House,” GOP Sen. Rand Paul said. “I think either the House leadership will put it forward and lose, or they will begin counting the votes very closely and decide not to put it forward.” (RELATED: Paul Fires Back At Trump And TrumpCare)
The House Freedom Caucus (HFC) is a voting block the Republicans are heavily relying on to pass their repeal agenda. If Republicans lose the Freedom Caucus’s support, the bill will not make it through the House.
House leadership made changes to the bill Monday evening in the manager’s amendment in an effort to gain more support leading in to Thursday’s vote.
Following the amendment, House Freedom Caucus Chairman Mark Meadows said: “I’m confident that we still have enough concerns that a vote of 216 votes in the House would not happen today.” Some 25 members of the HFC were leaning towards voting against the bill Wednesday evening, Reuters reports. Meadows hinted that Wednesday’s late night discussions were productive, although he made not comment as to what that means for the HFC vote.
Moderate and centrist Republicans met late Wednesday evening in Speaker of the House Paul Ryan’s office to debate the bill as it stands. After the meeting, Congressman Charlie Dent wrote: “I believe this bill, in its current form, will lead to the loss of coverage and make insurance unaffordable for too many Americans, particularly for low-to-moderate income and older individuals.” The congressman said this legislation fails to curb costs, and ultimately “misses the mark.”
If Trump and House Republican leadership are somehow able to pass the bill Thursday, it still faces the significant hurdle of getting through the Senate, where Republicans hold a slimmer majority and many lawmakers, like Sen. Rand Paul, have spoken out against the bill.
Trump has said he wants health care repeal through Congress by Easter, and sign it into law by mid-April. Secretary of the Treasury Steve Mnuchin promises tax reform by August. Infrastructure spending will continue be sidelined until tax reform is on the table.
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