Obama Health-Care Ruling May Turn Stock Tables: Chart of the Day

Health-care providers are unlikely to sustain a stock-market lead over medical plans once the U.S. Supreme Court decides on the Patient Protection and Affordable Care Act, according to Jefferies & Co. analysts.

The CHART OF THE DAY compares the performance of Morgan Stanley indexes for the industry groups since the last week of March, when the court heard arguments against President Barack Obama’s health-care overhaul. A ruling is due by next week on the law’s constitutionality.

Morgan Stanley’s Health Care Provider Index rose as much as 11 percent after setting this year’s low on June 4. The gain put the indicator ahead of the firm’s Health Care Payer Index for the year after trailing by 21 percentage points in April.

“Providers face a very tough road ahead,” the Jefferies analysts wrote in a report yesterday. They cited pressure from commercial health plans to limit costs, election “noise” from presidential and congressional candidates, and risks tied to Medicare rates and government finances.

Health-maintenance organizations and other payers have a more favorable outlook, the report said, because they stand to benefit from relatively low demand for medical care along with efforts to reduce expenses.

David Windley, a managing director based in Nashville, Tennessee, and three other analysts contributed to the report. Windley was joined by Arthur Henderson and Brian Tanquilut, also based in Nashville, and Omotayo Okusanya, based in New York.

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net