Good news, bad news
Shares of hospital operators got a boost after the U.S. Supreme Court upheld the constitutionality of the Obama administration's health-care reform legislation. The new law requires more Americans to have health coverage, reducing hospitals' burden of unpaid bills from the uninsured. Shares of largest private-sector hospital operator in the U.S., HCA Holdings (HCA), led gains. While, Tenet Healthcare (THC), Community Health Systems (CYH) and Health Management Associates (HMA) also traded higher.
Contrary to hospitals, health insurers' stocks took a dive, as the legislation will put in place a handful of potentially profit-stifling requirements, such as covering people with pre-existing conditions. WellPoint (WLP) is one of the biggest decliners, followed by Aetna (AET), Cigna (CI), UnitedHealth Group (UNH) and Humana (HUM). Medicaid-focused insurers, however, jumped as the health-care law should extend Medicaid to millions more people. Gainers include Wellcare Health Plans (WCG), Molina Healthcare (MOH), Amerigroup (AGP) and Centene (CNC). However, one analyst at Citi Investment, warned that gains in hospital stocks could be short-lived as investors turn their focus to the November elections given Mitt Romney has pledged to repeal the law.
SPDR Health Care E.T.F. (XLV : NYSE : US$37.30), Net Change: -0.17, % Change: -0.45%, Volume: 12,606,464