Gain in Managed Care Index Since President Obama Took Office: 96%
Much is at stake in the impending Supreme Court ruling on President Obama's health-care reform, including perhaps the stock prices of health-care companies. The impact on the industry depends on whether the court upholds the law in its entirety, throws it out, severs the individual insurance mandate from the rest of the statute or does something else. If the court strikes down the whole law, it would be a blow to hospitals and insurance companies, since uncompensated insurance costs would remain high. HMOs would suffer because they wouldn't get more members, and medical device companies wouldn't see increased demand.
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Why It Matters
Hospitals are seen as the biggest beneficiaries of the law as it stands now, since broader health-care coverage leads to more medical procedures and fewer cases of uncompensated care. Credit Suisse says the earning power of hospitals could jump by about 25 percent. Other potentially big beneficiaries of Obamacare: Insurance companies, which could add as many as 40 million new customers, and medical-device companies, which could sell more products. That's one reason why the S&P Supercomposite Managed Care Index is up 96 percent since 2009, when health care took center stage.
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What It Means for Your Portfolio
There may be shades of gray in the decision, and the market effects could be shaded accordingly. The justices may strike down part of the law, deciding -- for instance -- that the government can't compel anyone to buy insurance. That would probably be bad news for hospitals, insurance companies and medical device makers. There's also the possibility that the ruling won't have much impact at all on health-care stocks, whose performance has stalled recently on the uncertainty around the decision. Whichever way the ruling goes, odds are it may be little more than a speed bump along the way as the health-care industry continues to grow.
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