Health care reform winner: Hospital stocks; Loser: Insurers

ByABC News
July 17, 2012, 7:44 PM

— -- Q: Which medical stocks are the winners and losers from the Supreme Court's decision to uphold the health-care reform mandate?

A: Few actions by the Supreme Court have caught the nation's attention as much as the ruling on health-care reform.

Hospitals, patients, doctors, insurers all understandably eagerly waited to see how the mandate would be treated by the high court. But investors, too, had a big stake in the decision as the ruling stands to be one of the largest rearrangements of how medical care is paid for in decades.

The decision came down on June 28, where the Supreme Court upheld the law primarily on the grounds that it's essentially a tax. And with that decision, the law representing the biggest change to the U.S. health care system since the creation of Medicare in 1965 went through.

Now that the mandate has been withheld, investors have been scurrying to handicap the potential winners and losers of the rule. As a general rule, hospitals are considered to be the largest victors from the rule. Now, hospitals will have a way to recoup many of the costs incurred when uninsured patients come in for treatment.

But if there's one area where the predictors were wrong it's with the health insurers. It was widely expected insurers would be experience a net gain from the mandate, as the companies would get more customers as the uninsured got coverage. But, there's now a growing fear these companies might face higher costs as they're required to take more people with preexisting conditions onto their rolls.

While investors have made their initial reactions very clear, this story is far from over. Expect more political wrangling over the rules to ensue and even intensify amid this election year.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz