As the reactions of U.S. Supreme Court justices to the arguments in the latest Affordable Care Act challenge trickled out to Wall Street, investors in hospital and health insurance company stocks didn’t seem to think a key financial lifeline to the health industry would be taken away.
In the case known as King v. Burwell, the plaintiffs are arguing that a literal interpretation of language in the legislation rules out subsidies to buyers of health insurance in states that didn’t establish their own exchanges. Though the final decision isn’t expected until June, comments from justices today didn’t convince investors to sell off stocks in large hospital operators and health insurance companies that are benefiting from millions of new customers.
Shares of Tenet Healthcare, HCA Holdings and Community Health Systems jumped more than 5 percent for much of the late morning and early afternoon following comments from Justice Anthony Kennedy, often the swing vote on the closely divided nine-member court, that suggested he was troubled with the plaintiffs' case.
Kennedy seemed concerned about the repercussions of stripping coverage from millions of Americans just because they purchased health benefits from a venue regulated by the federal government. Kennedy was told premiums would soar for Americans who bought coverage on the federally-facilitated marketplace.
Here’s a more detailed analysis from the popular chronicler of the Supreme Court, SCOTUSblog. And below is a chart from Washington health policy analysts at Avalere Health outlining cost increases for Americans in specific states who purchased coverage via the federal exchange.
If the court rule against the Obama administration, an estimated 8 million Americans would lose subsidies and insurance markets could be tossed into a state of chaos. Shares of Aetna, Humana, UnitedHealth Group and Anthem have largely been in positive territory much of today.
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