McLean, VA (written by Matt Krantz/USA Today) -- Q: Which medical stocks are the winners and losers from the Supreme Court's decision to uphold the health-care reform mandate?
A: Few actions by the Supreme Court have caught the nation's attention as much as the ruling on health-care reform.
Hospitals, patients, doctors, insurers all understandably eagerly waited to see how the mandate would be treated by the high court. But investors, too, had a big stake in the decision as the ruling stands to be one of the largest rearrangements of how medical care is paid for in decades.
The decision came down on June 28, where the Supreme Court upheld the law primarily on the grounds that it's essentially a tax. And with that decision, the law representing the biggest change to the U.S. health care system since the creation of Medicare in 1965 went through.
Now that the mandate has been withheld, investors have been scurrying to handicap the potential winners and losers of the rule. As a general rule, hospitals are considered to be the largest victors from the rule. Now, hospitals will have a way to recoup many of the costs incurred when uninsured patients come in for treatment.
Investors have clearly agreed with the idea that hospitals will be the biggest winners. Hospitals HCA (HCA), Universal Health Services (UHS) and Health Management (HMA) are up 6%, 5% and 12% respectively since the mandate was upheld.
And as many predicted, the mandate seems to be a wash for makers of medical devices. Johnson & Johnson (JNJ) and Stryker (SYK) have posted mixed results since the ruling, with J&J adding 3% and Stryker dropping 1%. Drugmakers have also been winners. Shares of Merck (MRK) and Pfizer (PFE) are up 9% and 4%.
But if there's one area where the predictors were wrong it's with the health insurers. It was widely expected insurers would be experience a net gain from the mandate, as the companies would get more customers as the uninsured got coverage. But, there's now a growing fear these companies might face higher costs as they're required to take more people with preexisting conditions onto their rolls.
The stock market has made no mystery of its fear with how health care reform might affect the insurers. Shares of Aetna (AET), UnitedHealth (UNH) and WellPoint (WLP) fell 5%, 6% and 10% respectively after the measure cleared the Supreme Court.
While investors have made their initial reactions very clear, this story is far from over. Expect more political wrangling over the rules to ensue and even intensify amid this election year.