Health care fallout: Provider stocks jump, insurers fall

WASHINGTON -- Stocks of hospital companies rose sharply and insurance companies fell Thursday after the Supreme Court upheld a requirement that almost all Americans carry health insurance.

"The market has spoken appropriately," says Sam Isaly, manager, Eaton Vance Worldwide Health Sciences. Medical device stocks are down because there's a tax on them. Hospital stocks are rising because they don't have to provide free care, and there will be more people going through their doors." The overall market decline makes it tougher to measure reaction to the health-care decision, Isaly says.

"It's not a rotten outcome," he says. The worst outcome would have been if the Supreme Court had thrown out the individual mandate to buy insurance, but kept other provisions, such as those prohibiting insurers from refusing to cover people with pre-existing conditions. "It makes a large sector of the economy even more complex," he says.

Overall, "We remain bullish on the sector," says Dan Wiener, editor of The Independent Adviser for Vanguard Investors. "In the U.S. alone there are more than 77 million baby boomers — nearly 11,000 of them are turning 65 every day."

The broader stock market was down a little more than 1% Thursday. The Dow Jones industrial average, which was down about 100 points before the ruling at 10 a.m. ET, was down as much as 160 points after the opinion was released.

Chief Justice John Roberts, in a break with other conservative justices on the high court, sided with the majority in allowing the law to go forward with its aim of covering more than 30 million uninsured Americans.

Stocks of the largest drug companies in the country were down but not heavily, in line with the broader market. Stocks of medical device makers were also down about the same as the broad market.

The court found problems with the law's expansion of Medicaid but said the expansion could proceed under certain conditions.

Contributing: USA TODAY personal finance reporter John Waggoner; Associated Press