Obamacare Heals Hospital Stocks as 6 Million Sign Up for Plans

Hospitals Win on Obamacare Sign-Ups

Shares of the three biggest publicly traded hospital companies rose Monday after the government said that about 6 million people have signed up for Obamacare coverage for next year on U.S.-run markets, a good sign after concerns that the industry’s benefit from the program was shrinking.

Tenet Healthcare Corp. gained 8.9 percent to $29.86 at 11:57 a.m. in New York, after earlier rising 10 percent in the biggest intraday gain since June 25. Community Health Systems Inc. rose 5.6 percent to $26.60. HCA Holdings Inc. shares rose 4 percent to $67.05. Obamacare, also known as the Patient Protection and Affordable Care Act, is in its third year of offering coverage.

“There was a concern that the benefit from the ACA is not only plateauing, but that it could be receding,” Brian Wright, an analyst with Sterne Agee CRT, said in a telephone interview. “This data point is strongly in contrast to that view. The number of people getting covered is continuing to grow, and that should help hospital results.”

The data released Friday, along with other information on signs-ups, indicate that the number of people enrolled for that date will be about a third higher than at the same point last year, said Wright. He has a buy rating on Tenet and Community shares.

The sign-ups are good news for the industry after a worrying signal earlier this year. In October, Community Health said it was seeing more unpaid bills from patients who either didn’t have coverage or weren’t able to pay for their care. Hospital stocks fell as a result.

The 6 million figure only includes those who have signed up for coverage that starts on Jan. 1. Others can still sign-up for coverage that starts later. It also doesn’t include people whose coverage will be automatically renewed, or those who signed up in states such as New York and California that don’t use the U.S.-run marketplace to buy coverage. Thirty-eight states are using the U.S. market this year.

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