American Health Care Act approved by a margin of 217-213 - Nomura

Analysts at Nomura noted that today, the House of Representatives voted to approve the American Health Care Act (AHCA) in a close vote. 

Key Quotes:

"The AHCA, the Republican’s repeal and replacement of the Affordable Care Act (also known as Obamacare), passed by a margin of 217-213, with 20 Republicans joining all 193 Democrats in voting against the bill. Passing a health care bill in the House marks the first step in a long process fraught with uncertainty before the bill becomes a law. The next step involves the Senate, where it is generally agreed that the AHCA could not pass as currently written. Instead, there are two paths the Senate could take. 

The first involves the Senate failing to pass a health care bill in any form, a very real possibility as passage would require 50 out of 52 Republican senators to agree, a high bar for a politically diverse caucus. A number of Republican senators have already expressed serious concern regarding the current form of the bill. 

The second path entails the Senate passing a bill that would be materially different than the House version. In this scenario, a conference committee would draft a compromise of the two different bills, and the Senate and House would vote on the result from committee. Could a compromise pass the House and Senate? That could prove challenging, especially given the close margin in the House and recent public opinion polls indicating a lack of support for the health bill thus far. The timeline for the bill remains highly uncertain, but it is likely that the process in the Senate will take longer to resolve compared to that in the House and may possibly take several months. 

While this timeline could adversely affect Republican tax reform efforts in Congress, we hold to our earlier expectation of a modest tax cut, instead of full-scale tax reform, as the most likely result (read more: History and the Fiscal Outlook Suggest Modest Tax Cuts, Special Report, 31 March 2017). 

A modest tax cut would require much less time on the legislative calendar compared to comprehensive tax reform. The additional implications of today’s vote on the economic outlook appear to be limited. Indeed, debt and equity markets were little changed when it became clear that the bill would pass. While the vote arguably gives momentum to the Trump administration’s legislative agenda, any substantive changes in health care policy are a long way from becoming reality."