Supreme Court Health Care Reform: Wall Street Feels Good About Insurance Companies

Wall Street seems to think this man, Chief Justice John Roberts, won't let the health insurance industry blow up when the Supreme Court rules on health care reform.

Even as the health insurance industry openly warns about a doomsday scenario that would throw the market into chaos, Wall Street seems pretty optimistic about the Supreme Court's decision on health care reform.

Share prices for big publicly traded health insurance companies like UnitedHealth Group and WellPoint jumped on Thursday. Traders reacted with optimism that when the Supreme Court rules on the constitutionality of health care reform, the decision won't disadvantage insurers, according to an analysis by TheStreet.com.

Aetna led gains, reaching a 52-week high of $49.90 before closing at $49.56, a 6.5 percent hike from its opening price on Thursday. Coventry Health Care rose 5.9 percent to $34.60 and UnitedHealth closed up 4.8 percent at $58.11. The other three big health insurance companies -- WellPoint, Humana, and Cigna -- also saw gains in New York Stock Exchange trading.

The financial markets have had a more positive stance over the last two years toward the impact of health care reform on insurance companies than the firms themselves. The reason: profit margins are up and share prices have risen since President Barack Obama signed health care reform into law in March 2010, according to a study by Bloomberg Government.

Another reason why investors may not be panicking is that health insurance companies make a lot of money on lines of business that wouldn't be much affected by whatever the Supreme Court does. Most Americans with health coverage get it at work and health insurance companies also have lucrative Medicare and Medicaid contracts that wouldn't go away.

The Supreme Court spent the first three days of this week hearing oral arguments in a challenge against health care reform brought by 26 states and other plaintiffs. The chief issue is the law's individual mandate that most U.S. residents obtain health coverage starting in 2014 or face a tax penalty. The plaintiffs contend it's an overreach by the federal government while the Obama administration argues it's necessary to regulate the national health care market. A ruling is expected by the end of June.

Court watchers on Wall Street may be keying on Chief Justice John Roberts saying "without the mandate, the whole thing falls apart" during yesterday's session, according to TheStreet.com. Some believe this suggests Roberts is inclined to invalidate the entire law if he determines the individual mandate to be unconstitutional.

The health insurance industry and the White House contend the mandate is so closely tied to insurance-market reforms in the law that they should stand or fall together. The Court's four liberal members are expected to support upholding health care reform and Roberts and Justice Anthony Kennedy are viewed as the most likely of the five conservatives to join them.

The Court could uphold the entire law, overturn the whole thing or repeal only portions of it, such as an expansion of Medicaid for the the poor or the individual mandate. Health insurance companies and the Obama administration are sounding the alarm about the latter outcome. Doing so would leave in place rules that insurers must sell policies to anyone who wants one, regardless of health status or age, and that limit their ability to charge higher premiums to people with bigger medical bills.

A full repeal of health care reform would deny health insurance companies access to the 24 million people protected to buy coverage through the law's "exchanges" by 2019. But the health insurance industry lobbied hard against the health care reform legislation, suggesting the companies wouldn't mind seeing the law disappear. Insurers have already incorporated some of the law provisions, such as not discriminating against children with pre-existing conditions, and may not jettison those policies even after a repeal. Other programs, including a government-funded health plan for adults with pre-existing conditions, would be nullified by repeal.

Comments

[Wayne Caswell]

04:15 PM on 04/02/2012

If the ACA is killed, some sort of healthcare reform must still be enacted, like Medicare for all. But a bigger impact may be the damage to the US political system and citizen trust in Congress, the Presidency, and Supreme Court where a few politically appointed justices with life terms and no accountability make decisions critical to our lives, society and economy, and with huge influence from wealthy special interests.

[Scott Leland]

10:15 AM on 04/05/2012

When the "Insurance Mandate" is declared unconstitutional that will leave millions of Americans with preexisting conditions unable to get health insurance. This is going to place incredible pressure on the House of Representatives to come-up with legislation to cover them in an election year. Will the House Republicans be able to do that?

http://www.flixya.com/blog/2519148/Republicans-Refudiate-Health-Care

[l78lancer]

04:56 AM on 04/02/2012

Ruling against the individual mandate alone would have the net effect of gutting the law without invalidating other provisions. Because the Roberts Court has no aversion to partisan politics (to which they are supposed to be impervious), it would be no surprised if the court invalidates the mandate alone regardless of the merits, thus giving the the perception of full deliberation while at the same time supporting conservative partisan objectives. They would effectively remove the heart while leaving the body. By doing so they may be able to avoid the dubious distinction of being the first court since Roosevelt to overturn a keystone of a presidential term.

[Squiggie]

01:47 AM on 04/02/2012

In this "SICK" culture, we are directed to "Follow the Smart Money", in order to have food, shelter and security...!
FLASH: The Smart Money is a Shell Game...Three Card Monty...A Scam...A Stacked Deck...
The Whole Enchilada is designed to FLEECE and Separate us from our Heard Earned Wealth...
F Wall Street...F our Corrupt Oligarchy and F the Carpetbaggers who divert our attention away from reality...!

[Scott Leland]

10:10 AM on 04/05/2012

Yes, you are right, like the "Cheatercos" don't have enough advantages over Americans already to "upsell" US (run-up the bill every time we have to get an oil change....)

[Michigan Joe]

09:47 PM on 04/01/2012

If ever the Republicans and the insurance industry should be very worried, it should be now.If health care reform is shot down, the only other way for health care to move forward is for a public option leaving the insurance industry nothing much but anger at the Republicans. If Obamacare is turned down by SCOTUS, the voting polls come November will make it a landslide for Democrats and the House goes too to the Democrats. This is a double faced sword and the only loser is the Republicans. And the next step makes a public option a reality.

[Rick4646]

09:03 PM on 04/01/2012

The majority of Justices have only shown to me is that they are a political machine; they don't rule based on judicial law, they rule for what's good for their party -- Citizens United is the perfect example.

[ralphnovy]

08:56 PM on 04/01/2012

Does anybody else smell "insider trading" here?

... that at least a few, slick Wall Street types have been "leaked" the "inside" dope about how SCOTUS is going to go with respect to the ACA?

I'd like FICA-authorized wiretaps on Thomas and Scalia, in particular.

[r3000]

10:55 PM on 04/01/2012

I think you meant Fisa. But you're being facetious now anyway. These are some darkening times. Watch this election slip away.

[ralphnovy]

03:45 AM on 04/02/2012

Yes, FISA. LOL.

[Scorpiaux]

03:57 PM on 04/01/2012

Some USSC justice said that the Constitution is not a suicide pact. I agree. Neither is it a license to kill. The SCOTUS should affirm the health care law as being Constitutional.

[LunaPark]

02:14 PM on 04/01/2012

Roberts is a Neoconservative. He'll vote in favor of expanded government and Obamacare. There is no difference, other than a few unsolvable wedge social issues, between a Neoconservative and a liberal progressive. Neocons trace their roots to radical socialists.

[Scorpiaux]

03:58 PM on 04/01/2012

Ridiculous.

[84BADGER]

04:11 PM on 04/01/2012

Agreed. Politically they are polar opposites in so many ways. Think of the idea of American imperialism for starters. There are plenty of others.

[Scott Leland]

10:20 AM on 04/05/2012

Yes, it is interesting that the prominent Neocons were leftists during their college years. I don't think that Chief Justice Roberts is a Nc though, he had a career of arguing cases before the Supreme Court for several years that showed him to be a Conservative legal theorist.

[Wayne Caswell]

09:54 AM on 04/01/2012

A Court that can blow up the election process with Citizens United can surely blow up healthcare.

[Scott Leland]

10:23 AM on 04/05/2012

It was a logical conclusion that the 1st Amendment right to Freedom of Speech would cover the money that fuels it's distribution and proves how powerful television (and Utube videos) is at selling US.

[Janzee12000]

10:16 PM on 03/31/2012

"Wall Street Thinks He Won't Blow Up Health Care". Suuure! Look at that smile.. The mandate is a Republican supported idea that provides 40 million new customers to camaign donors. He wouldn't go against something like that...

[Scott Leland]

10:26 AM on 04/05/2012

But how will that affect the rest of the Economy? That is $3,500-$5,000+ a year that is now being spent on clothes, cars, electronic devices, furniture and smartphone contracts that will have to be spent Health Insurance.

[Janzee12000]

08:03 PM on 04/05/2012

Oh, you're thinking that the $10,000 you are already spending on HC will be reduced to 3,500-5000. Think of that extra cash!

[pinetrale]

08:58 PM on 03/31/2012

The members of SCOTUS are very much human and probably he remembers all to well the embarrassing criticism of Citizens United Obama gave the court in his first State of the Nation Speech. Something like that can stick in someones crawl for years and come out as a striking down of Obama's most favorite achievement, just cause they can do it and it fits well enough into their right wing ideology. I am not at all optimistic they will let the health care reform stand as it is.

[iridium53]

08:53 PM on 03/31/2012

Wall Street should know.

They know what they bought

Roberts, Thomas, Scalia, Alito and Kennedy.

[cerdayes]

01:11 AM on 04/01/2012

inyou needed another reason to vote for BO.

[marinemomof3]

05:40 PM on 04/01/2012

Note: Semper Fi not only means 'Always Faithful', it means "pretty d@mn smart" !

((wink))

[riverhouse]

05:40 PM on 03/31/2012

So, Roberts will rule on the constitutionality of an issue based on insurance companies profiting. What a grand country we have.

[cerdayes]

01:12 AM on 04/01/2012

best wealthcare system in the world! just as the insurance companies if you dont believe me.

[Grichde]

04:02 PM on 03/31/2012

Guess all is well in Obama land.

[uniquindividual]

12:51 PM on 03/31/2012

Corporations are not people

Money is not speech.

Move to amend the constitution.