High court ruling benefits most health care niches
TRENTON, N.J. (AP) - The Supreme Court's decision Thursday to uphold President Barack Obama's historic overhaul is expected to be a boom to most of the health care industry by making coverage affordable for millions of uninsured Americans. But not every company will benefit.
Drugmakers, biotech companies, hospitals and insurers likely will get additional customers because the law requires nearly everyone to have health insurance or pay a fine. That's expected to bring coverage to about 30 million more Americans.
Medical device makers, meanwhile, will be hit with a sizable tax on their sales imposed under the overhaul law, without expectations of boosting sales sharply.
Stocks of hospital companies rose sharply and insurance companies fell after the ruling.
The stock of Hospital Corp. of America, the largest private hospital chain in the United States, rose a little more than seven percent. Quest Diagnostics, which runs laboratories, rose almost three percent.
Gary Taylor, a financial analyst for Citi Investment Research, wrote in a note to clients that the ruling was "a surprise win for hospital companies," which stand to benefit from tens of millions more people getting health insurance.
He cautioned that hospital stocks could "erase all their gains" from the court decision if Mitt Romney defeats Obama in the presidential election this fall. Romney has pledged to repeal the law.
Insurance companies were down sharply as analysts rushed to sort out the ruling. UnitedHealth Group stock fell almost 3 percent, WellPoint 6 percent and Aetna 3.6 percent.
The broader stock market was down a little more than 1 percent. The Dow Jones industrial average, which was down about 100 points before the ruling came out at 10 a.m. EDT, was down 160 points after the ruling.
Chief Justice John Roberts, in a break with other conservative justices on the high court, sided with the majority in allowing the law to go forward with its aim of covering more than 30 million uninsured Americans.
Stocks of the largest drug companies in the country were down but not heavily, in line with the broader market. Stocks of medical device makers were also down about the same as the broader market.
The court found problems with the law's expansion of Medicaid but said the expansion could proceed under certain conditions.