Obamacare Replacement to Cover Fewer People, Sparking Blowback

whether at the grocery store or the trading floor. Find the Bloomberg P and L Podcast on iTunes, SoundCloud and at Bloomberg dot com. We heard from President Trump just shortly ago. We heard that he reiterated his plan to roll back Obamacare. But what is less clear is exactly

how Republicans plan to do this. But with some sense of clarity is Zach Tracer, a healthcare reporter for Bloomberg, who wrote a really compel piece today on the Bloomberg Zach, So, this story talks about some of the details that we are learning. Can you outline what those are? Sure? And I think the thing to keep in mind here is that we haven't seen a bill. We we don't know what you know, Republicans in um the House are are

going to try to get past. But what we are hearing is that you know, first off, UM, likely it will get rid of the requirement in Obamacare that everybody have health insurance. Um, it might make some changes to the subsidies and sort of the the net result of all this is that fewer people are going to have health insurance. At the end of the day, we keep hearing about the three legs of the stool of the Affordable Care Act. Can you pull one of them away

and still have the stool be useful? That's right. So one one of the big problems here will be that by ending the individual mandate, the requirement that people buy health insurance, it will be really tough to to keep healthy people in the market potentially, And that's one of the things that the republic plans are trying to grapple with is how do you get sort of young, healthy people to buy health insurance in the absence of a law requiring them requiring them to do so. And that's

something you know that that Obamacare struggled with too. So I think, um, you know, if if folks can come out of this with a better option, a better plan, um, that may be an improvement. How exactly are these details about a potential replacement coming out? You know, we've been talking with lawmakers and um, you know, these these lawmakers are confronting constituents, and so they're trying to come up with ways of explaining here is what Republicans want in

an Obamacare replacement. And just when you say confronting instituents, you're talking about in part the town hall meetings that have gotten rather heated right around the around the country. That's right. So you know, Congress is out this week, so lawmakers are back in their districts talking to the folks who voted for them or who didn't, and they're trying to say, here is what Republicans want to do

with Obamacare. And it's not easy because they don't have, you know, one specific bill, and so they're they're sort of trying to outline these principles. And one of the things that we've discovered from interviewing them is that, you know, it's very difficult to talk about this idea that fewer people are going to have health insurance. Does the does the nomination process of Dr Tom Price for the head of Health and Human Services. Does that in any way affect what may or may not happen with the a

c A. So. Dr Price, who's now the head of the Department of Health and Human Services, UM will probably play some role in crafting this, uh, this replacement. It's not clear yet just what that will be. UM. He said he's going to leave it up to Congress at least initially, but I do think the the administration will play a role at some point. UM. You know, one thing he talked about a lot, and that comes up here is the importance of what they're calling access to

health insurance. So Republicans are going to give folks some sort of tax credit that will help them by health insurance and say, look, everybody has access. It's up to you whether or not you buy health insurance. I have to wonder going forward, at what point do they have to come up with a replacement. Is there a sort of deadline? I think that the the insurance companies that are selling health insurance and Obamacare really really need certainty.

They are going to be deciding on their their plans for eighteen in the next few months, really m by May, and this is what Etna, Anthem senteen, health Net, Wealcare, I mean all of Melina, Humana, United Health, that's right. And and already we've seen you know, Humanita and United Health pretty much quit and has pulled back. Um And you know Molina has said, for instance, that they need certainty or they may pull back. Anthemis as something similar.

So the health insurance are warning, look, if we don't get certainty, we are not going to sell these health insurance plans. Have they pulled back because of uncertainty or because it wasn't profitable for them? More because it wasn't profitable for them. Um. The the idea is, you know that if you can't make money, and this gets back to what we were talking about with you know, getting enough healthy people into the system. If you can't make money on the why would you you know, play in

this market. What about drug pricing? The issue of whether Medicare can actually negotiate, whether the government can negotiate drug prices has long been a point of debate. Is there any anything you can tell us about that? Yeah, it's definitely a point of debate and something that that will continue to be debated. Sema Verma, who's the nominee to head the Centers for Medicare and Medicaid Services was asked about this at her confirmation hearing, and she said, you know,

I think the current system works pretty well. There's a lot of people that would disagree with her, and so I think that it's going to continue to be a debate what health insurers would like to see with respected change is made to a c A. I think one thing that health insurers really have said overall is there needs to be a way to get more young and healthy people into the insurance pools. So, you know, big

problem right now is it's mostly older and sicker people. Um, you know, they feel like, um, you know, they're they're not tied to the old system that they'd be pretty open into some of the Republican replacement plans. They just want to know what are the rules that we have to operate under. Is there any guidance for what the actual public exchanges will look like? Indeed, will they even remain the way they are in uh, let's say online form, which is where most people interact with them. You know,

it's a great question. Um. I think that the Republican plans will likely have some role for an online market place, whether they call it an exchange or something else. It's you know, a popular way to buy you know, plane tickets in hotel rooms. So so why not health insurance? From what you here are Republican and Democratic congressmen coming together and discussing this or is this really being left

to the individual parties to negotiate among themselves. I think at this point that the Democrats are pretty happy to leave this. Two Republicans, I mean Republicans again control both houses of Congress, they control their presidency, so you know, at this point it's something that they're having to hash out. And um, I think they've so far not gotten Democrats on board. Who is the ring leader with respect to the Republican negotiations? You've seen it right now coming out

of mostly out of the House. Um, you know, so it has to come out of the House first, and then um, move on over to the Senate. I think that's where the rubber may meet the road. You know, there's some of the things that could pass the House may not pass in the Senate where the vote margin is much narrower. Do we have any numbers? Do we have any like how much any of this would actually cost? You know, one thing that's going to be a real

challenge is that cost issue. So um, Republicans will want their plan to cost um to to have on the cost side to cost somewhat lower than the A C A. They also want to repeal a lot of the taxes, potentially all of the taxes in Obamacare. That math is very, very difficult, and um, we don't know how they're gonna how they're gonna but I mean, is there like a big number out there that we can I mean, may not be accurate for what turns out to be the result, but I mean, right now, is there any idea how

much any of this cost? Or is it sort of like healthcare you don't know until actually have to go and pay it. Yeah, I think it's so much of it's going to be in the details, you know. One of the big questions how bigger the subsidy is going to be? All Right, I want to thank you very much. Zach Tracer is our healthcare reporter of for Bloomberg News. I'm sure you're gonna be following this for quite a while. I mean, thank you very much for your your insight.

Shares of a j C Penny down about eight percent right now, after the retailer says it's going to shut as many as a hundred and forty stores. Here to tell us more, Punom Goyal, retail analyst for Bloomberg Intelligence. Punom, let's begin with J C. Penny and tell us what are they doing in order to fix what looks like a very challenging experience. Sure, I think you know there's very little that they can do to really fix the issue.

Traffic is a secular issue for retail and all brick and mortars, So to reverse traffic and get it to actually increase in stores is probably not something anyone can turn around as quickly as they'd hope. But what they can do is fix their apparel business. The apparel business is more than fifty percent of their sales, and it's struggling, especially women's apparel, which is total business. Well, can you can you zoom out a little bit? Because we've gotten

a lot of retail earnings this week. We've gotten l Brands, We've gotten Coals, we've gotten Macy's in addition to J C. Penny, Is there anything that you can see that sort of a unifying feature of all of the earnings that can point to the state of the retail industry, sure, so all of them across the board. Traffic is weak, but the number of people in the stores stores, yeah, Basically, people aren't going to stores anymore. They're going less and

less and they're shopping more online. The other thing is that's something they can't control. But what they can control across the board is their inventory, and all of them are lean on inventory, which means that they have less product in store so they don't have to mark the product down if sales don't meet plan, and that helps their gross margins. You mentioned women's apparel. What's wrong with the women's apparel offering at j C Penny? You know,

I think it's just the brands that they have. There aren't that many national brands and women's apparel, so it really hinges on the private and exclusive brands that each retailer carries. The problem is not just that j C. Penny. Macy's has the problem too, and so does Calls. I think women are just you know, shopping where they find the right fit, where they find the right product, and they're not as loyal to where they shop, so if they see things online, they're willing to go there and

try it out. Well, I'm wondering, then, does it need to have a real rethink of what that real estate that big box is all about. Because if you can't necessarily sell the clothes and the appliances in order to boost your returns, then why not use that real estate to invite different types of merchants to come in and actually create some foot traffic. That's what we would like them all to do. They're just very slow to move towards that. You heard Coals talk about it a little

bit when they talked what are they waiting for? They waiting for a final collapse of the big box retail Uh, you know location because it seems as though this has been going on that you know about it, We know about it, the country certainly knows about it. What's keeping them from innovating lower rents so the big box retailers the department stores don't pay that much rent because they were considered the traffic drivers when you know the mall's

first opened and um. Therefore, since the rents are low, they're slow to innovate. UM. And that's they have long term leases, so they have to work with the rates to come up with plans to add other categories or even other retailers, or even maybe give up a floor of the space. Many of them owned two floors. Do they really need two floors? I don't think so exactly. Why isn't there a Starbucks, let's say in every J C. Penny, Well,

there's a Sephora, right, that's true. So which company of these brick and mortar retailers is doing the best job? I think North Term is doing the best job. You saw it in the results yesterday after the market closed. They really, you know, kept their inventory tight to drove growth, margin expansion. And while full line is still pressured, um, you know, Rack is also a little pressured. Their online sales, which are twenty five percent, which I think is the

highest of the department store group is growing double digits. Well, the stocks up stocks up four percent right now. J W. Nord's from up at dollar eighty six cents, and they said that the President Trump's tweet against them had a quote negligible impact on sale. So who's doing the worst job in your opinion? I think L Brands right now?

Quite frankly. I mean, they're a really good brand. But when they cited their quarter was AT's say, okay, today own but the February remarks that they made with victorious secret sales down almost that's a huge miss. I think they really need to think about what's happening in the lingerie space. They've dominated that space with elevated pricing, brand perception,

and there's just been more competition there. So I think they need to think about what to do next and how they're going to preserve share where their price points are much much higher than competition. Uh and just a real quick with J. C. Penny's approach to shut up to one hundred and forties stores, do you think that this will be sufficient for them? I think there will be more. I think this is the first step. They have over a thousand stores that will bring them to

a little over eight to fifty. And it's said in many reports, you know, there's about four five hundred moles in America that you want to be in, So that's still a lot more stores fun what most retailers would want to be in. Yeah. It says that the closings represent as much as of the company's store base, but just less than five percent of total sales. It seems like they're targeting the stores that have the lowest foot traffic.

Punam Goyle, thank you so much for joining us as always very informative on this peak week for retail earnings. Peanter Punam Goyle, senior US retail analyst for Bloomberg Intelligence, speaking to us from our headquarters in Princeton, New Jersey. P and L is brought to you by Proper Cloth, the leader in men's custom shirts. At proper cloth dot Com. Ordering custom shirts has never been easier. Create your custom shirt size by answering ten easy questions, select from over

five fabrics to suit your personal taste. Shirts start from eighty five dollars and are delivered in just two weeks with proper Cloths perfect fit guarantee. Remakes are completely free and expert staff are standing by to help. For premium quality, perfect fitting shirts, visit proper cloth dot com um custom shirts made Smarter. This is Bloomberg Market Time. PIM Fox, along with Lisa Abramowits I want to bring into lou

Olo Rooney Pa. He is our White House reporter. He's at the White House for Bloomberg News to get his analysis of President Donald Trump's speech today at the Conservative Political Action Conference that was at the Gaylord National Resort. And Convention Center. To Lou, is anything specific that that stood out for you? I was gonna ask you about the Europe his comments about Europe and and Sweden and France, but maybe something else stood out to you. Well. It

was a very long speech. She talked for about fifty minutes, and he talked about just about every different topic that his administration has has covered in a short time. It was sort of a mismatch of his his campaign speeches over the last year and a half. His inauguration speech he had some lines from there, and obviously the on going what he calls a war with the media, which he is called the enemy of the American people. He

spent a lot of time talking about that. Right, we are all fighting fake news, and he tried to distinguish fake news from all news. Uh. He also went back to build the wall and uh talking about military strength. To Lou, I really want to ask, has you have you ever seen a president before who, right after getting an office, makes no effort to reach across the aisle and try to unify the different parties and and just sort of sticks to the same kind of tone that

they took during the campaigning. I have not and it's definitely a sign that this president wants to continue to rely on the base that brought him into office. He believes that if he was able to get into office using this strategy that you know, if it's not broken, why why change it. So it does seem like he's you know, appealing specifically to his base and making a lot of enemies along the way, including our European partners who he singled out in the speech in Germany and

Sweden and France. Well, tlue to that point. The strategist who you speak with, do they think this is going to be effective? Uh, well, I think it's effective in one way in terms of keeping his base, you know, rallying behind him. But obviously we remember that the president did not win the popular vote and and continues to

suffer from very low approval rating. So in terms of being able to coalesce the Republican Party around him and actually bring up on Democrats that he's going to need to get through legislation, it does not appear that it's going to be effective because we're not seeing very many people go across the aisle to say, you know, Democrats

saying that I will support President Trump. We're seeing larger resistance and even some Republicans that are uh, you know, going up against their own Republican members of Congress saying that they're not happy with the way things are going. He also mentioned the issue of NAFTA and trade agreements that the United States has previously signed. We know about the TPP Trans Pacific Partnership. It was almost a done deal that that was not going to make it to

the to the Senate floor. Can you speak to us about the international relationships that the United States has, because it seems as though that has been one of the sore points, at least so far, of the US administration's relations with the overseas partners. That's definitely true. The President has said that he's pursuing in America first policy, and that often leaves some of our international partners and allies wondering whether the US is going to abandon these long

standing partnerships when it comes to trade. The President did pull out of the TPP deal. He's also basically said

that he does not want to engage in multilateral deals. Um. He wants to engage one on one with different countries, and he wants to, uh, you know, take another look at NAFTA, one of the long standing trade deals between the U S And Canada and Mexico, and a lot of these countries that are our allies are wondering whether the US is going to take a more nationalist in isolation isolational stance and if they do, um these countries

are wondering what that means for. Was the audience at the Sea Pack event this time the same as it has been in previous years. It was largely the same audience. You had a number of libertarians, you have a number of conservatives, a lot of young people. This year, we did not see as many members of Congress who attended

or spoke at at this event. Uh this seems to coincide with the recess portion of the congressional schedule and a lot of Congress members are back home and they're facing crowds of their own with these town halls where members are facing protests. But for the most part, it was very similar to what we've seen in the past, but maybe a little bit more cheers and happiness at the idea that there's a Republican Congress, Republican House, and

sent along with the Republican White House. So in other words, this was the same audience that rejected President Trump last year the year before. I suppose I should say, yeah, the President has a long history of over the last five years of going to see pack and when he was there, he was not received with such a you know, a receptive audience, in part because no one thought he

was actually going to run for president. But now that he's run and he's actually won the presidency, a lot of people that are embracing him and they're they're sort of trying to merge their version of conservatism with Trump's and uh and be a big tent party. So we'll see how that works. Tolue another area, Dakota Access Pipeline and Keystone. He spoke about that, speak a little bit

about the energy policy and what that what the plans are. Yeah, the President said that, you know he uh, he basically said that he's authorized construction of the Keystone and Dakota pipelines. These are pipelines that were stopped under the Obama administration. Uh. The President said that also that he wants all the pipelines that are built in the US to be made

with US steel. We're not sure exactly how he's going to go about enforcing that, but he basically said that, you know, he's unshackling the the the US energy market and allowing uh, you know, these pipelines to be built and allowing uh, the US to access the energy that's

that you know, he believes it's under the ground. So it's definitely a market shift from what we saw under President Obama, who took a much more environmentalist stance on energy and you know, halted a number of these pipeline projects. President Trump says that these are good for jobs, and he does not think that the environmental regulations are as important as the jobs that could be created through these different pipeline projects. Talu Alarnapa, thank you so much for

joining us. Bloomberg White House correspondent at the White House Busy busy man, Thank you so much for taking the time. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm out there on Twitter at pim Fox. I'm out there on Twitter at Lisa abramoid One. Before the podcast, you

can always catch us worldwide on Bloomberg Radio. P and L is brought to you by proper Cloth, a leader in men's custom shirts, with proprietary smart sized technology and top rated customer service. Ordering a custom shirt has never been easier. Visit proper cloth dot com to order your first custom shirt today