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These are the 'three scenarios’ ahead for ACA before the election: Analyst

Ana Gupte, AG Health Advisors Principal joins Yahoo Finance's Kristin Myers to break down the latest in health care, as Democrats push back on President Trump’s SCOTUS nominee on fears of Obamacare being overturned.

Video Transcript

KRISTEN MYERS: I want to jump straight into our conversation about the Supreme Court. President Trump has announced his Supreme Court nominee, Judge Amy Coney Barrett. And so for more on what this could mean, particularly to health care going forward, we are joined now by Ana Gupte, AG Health Advisors Principal. Ana, thank you so much for joining us today.

So one thing, so many issues have been mentioned as what's at stake with this new Supreme Court Justice replacement of RBG, given her passing just recently. I'm wondering what you think is the most at stake. What is the biggest issue going forward that could be on the docket for the Supreme Court with this potential new conservative replacement?

ANA GUPTE: So the biggest issue is the Affordable Care Act, Kristin, or Obamacare. And this is as the Affordable Care Act is insuring 20 million people. So it's an end unto itself.

But in addition to that, as we all have observed, the Democrats are using that as well as a platform for why voters should show up at the booth and should vote not just for Biden as president, but also down ballot, to get the Senate Majority to the Democratic side so that they can influence what happens in the Supreme Court.

There are some clear catalysts. So we have most likely Judge Amy Barrett will be confirmed by the end of October before the election. And then we have the November 3 election.

On the tenth of November the Supreme Court is scheduled to hear the court case on Obamacare, which had been tabled by a lower court to say that the entire law should be overturned, because in 2017, they had appealed the penalty and the individual mandate, and then finally, what happens after the election and the Supreme Court decision. So there's a lot going on there. And I mean, I'm happy to share my thoughts. But maybe we have a conversation instead.

KRISTEN MYERS: I'm asking because Democratic National Committee Chair Tom Perez said that health care was on the ballot November 3. I'm wondering if you can walk us through, perhaps. Democrats are thinking about it in terms of health care and how they might be able to use health care to sway or woo voters over to the Democratic side.

And do you think that it's going to work, especially as Republicans, despite their flip flopping on what they had done just previously when Justice Scalia passed away, them trying to ram through this vote by October 29, how do you think this is going to impact the elections? And how do you think Democrats will be able to health care as an issue in the election itself?

ANA GUPTE: Yes, so I'm of the view-- there are three scenarios. The one that I think is going to increase in probability with the nomination of Amy Coney Barrett is that there's likely to be a Democratic sweep.

And the reason I say that is because not only will they be able to galvanize voters-- and voters will be galvanized on both sides, I think, to show up at the voting booth-- but you're more likely, and some polls have also pointed to that, have swing white suburban probably women voters moving more left.

And then more than that as well, the strength of the vote is likely to increase within the Democratic base, not just toward Biden as president, but also down ballot I think the importance of the composition of the Senate is really being thrown into relief. Then of course are the two other scenarios, with Biden in divided government and Trump in divided government.

And I think both of those have probably gotten an increased likelihood to the same degree. So I think on balance, I don't think it increases the probability either of those two any meaningful degree. Finally, of course, we do know that President Trump has been concerned about the absentee ballot and so on, so to that degree, that's a bit of a wild card.

And the Supreme Court, with a 6-3 majority, if that does end up in court, I think that could be very complicated story leading up to the inauguration on the 20th of January.

KRISTEN MYERS: So Ana, given all of this policy uncertainty, particularly around health care, I'm wondering how an investors can start looking at their portfolio. Right now health care is one of the laggards of the day. But we have seen some pharmaceutical companies absolutely soaring, especially with the potential news of a coronavirus vaccine.

ANA GUPTE: So I would put the bio-therapeutic and the therapeutic companies in one bucket. And then there's another bucket around health services, which are the payers, the managed care companies, the providers, and the care delivery system, including hospitals and the digital health companies.

I think the therapeutic companies do trade on nine different factors. And it's heavily going to be driven by the pandemic, the likelihood of a vaccine in the near term. There are six or more candidates right now close to or having already entered Phase 3 trials. So I think there are certain horses you you ride on that one.

When you just look at SCOTUS and the election itself, however, my view is that the most likely scenario is actually SCOTUS does not overturn the law at the end of the day. We don't quite know about the election. But at the end of the day, there is going to be likely three scenarios for the Affordable Care Act, it remains as it is, it is is overturned, I think lower likelihood, and it's possibly even strengthened post-election.

Given that, my picks on the services side would be a couple of managed care companies, United and Humana, I believe, on the defensive side, great secular stories, low risk around the pandemic and the law, and are valued very attractively.

I would also be in digital health companies, like Teladoc, and then on the offensive side, Centene. The risk of the Affordable Care Act, even though they're exposed, is priced in at this point. It's a very high quality company. And I think you should be well-positioned on all of those four, regardless of the uncertainty.

KRISTEN MYERS: Right. Well, unfortunately, we will have to leave that there. We will have to bring you back on in the future.

ANA GUPTE: Thank you, Kristen, I appreciate it.