Supreme Court Rules on Healthcare, The Fallout By Sector (Updated)

Thursday was D-Day for the Supreme Court decision on the Obama healthcare mandate as to its constitutionality. The long and short of it is that the mandate is constitutional as a tax after a 5-4 vote.  The Supreme Court did rule, however, that it finds fault with the healthcare law’s expansion of Medicaid.   Today’s ruling shows that Congress did act within its powers by requiring most Americans to carry health insurance or pay a penalty for not carrying insurance.

The ruling is deemed a win for hospitals, doctors, and employers who have been hanging in the balance during this long fight. Still, it seems that today’s decision effectively reinforces that individuals can simply refuse to pay for insurance and pay the penalty. It also appears that Congress cannot penalize states which choose to not participate in the new program by taking away their existing Medicaid funding.

HCA Holdings, Inc. (NYSE: HCA) is up 8%, Health Management Associates Inc. (NYSE: HMA) is up 6%, Community Health Systems, Inc. (NYSE: CYH) is up almost 9%, and Tenet Healthcare Corp. (NYSE: THC) is up 8%. Hospitals will now effectively receive higher reimbursement and will have lower losses as a result.

The insurance sector is a tad lower but it is not trading as though a blowup has occurred.  These have also bounced from earlier lows. UnitedHealth Group, Inc. (NYSE: UNH) was down 1.6%, Humana Inc. (NYSE: HUM) is down 1.7%, and Aetna Inc. (NYSE: AET) is down 2.6%. UPDATE at 10:57 AM EST: UNH down 2.9% at $57.50; AET down 4% at $39.30; HUM down 4% at $76.40.

Boston Scientific Corporation (NYSE: BSX) is reacting negatively with shares down 1.9% at $5.53 as it is among the harder-hit device-makers which will effectively have a higher tax in 2013. UPDATE 10:58 AM EST: BSX down 2.4% at $5.50.

The Health Care Select Sector SPDR (NYSEMKT: XLV) ETF is trying to find its footing and shares are down 0.7% at $37.21.

SPDR S&P Biotech (NYSEMKT: XBI) has now fallen by 2.5% to $86.41 over fears that this will drive down the profitability of biotech drugs.  Amgen Inc. (NASDAQ: AMGN) has long been under attack over reimbursement rates, but this is down only 1.1% at $71.52.

Generic drug-maker Teva Pharmaceutical Industries Limited (NYSE: TEVA) is down 1.6% at $38.41 so far this morning.

The full 193-page Supreme Court ruling and opinion is here.

You can read more on the outcome and opinion on the Scotusblog.com which has been live blogging this today.

More to come…