Hospitals Fall After Top Court Clouds Future of Obamacare.

http://www.bloomberg.com/news/2014-11-07/hospitals-fall-after-top-court-clouds-future-of-obamacare.html

U.S. hospital owners including Community Health Systems Inc. (CYH) may suffer a significant blow if the Supreme Court takes away subsidies that some Americans get to buy health insurance under the Affordable Care Act.

The court said yesterday that it would rule on whether people in at least 34 states will be allowed to receive subsidies to buy insurance under the law, which has helped cut the number of uninsured showing up at hospitals.

After the Court’s decision to take up the case was announced yesterday, Community Health, the second-largest publicly traded hospital chain, dropped 5.5 percent to $47.81 at the close of New York trading. HCA Holdings Inc. (HCA), the largest U.S. hospital company, fell 4.7 percent to $65.75.

Community Health is most at risk of all the major hospital operators, said Ana Gupte, an analyst at Leerink Partners LLC, with 96 percent of its hospital bed capacity in states with federally run exchanges.

Health insurers weren’t hit as hard. UnitedHealth Group Inc., the largest U.S. health insurer by sales, fell 2.7 percent to $93.61. Aetna Inc. dropped 2.9 percent to $82.29.

If the court rules in favor of the Republican-backed suit, an appeal by four Virginia residents seeking to block the subsidies, it’s not clear what would happen to the more than 4 million people who signed up for a subsidized health plan through a federally facilitated exchange, said Chris Rigg, an analyst at Susquehanna International Group LLP.

“It’s hard to predict for sure how things could play out politically or administratively,” Rigg said in a note yesterday. He called the Court’s move “a negative for the hospital group.”

Rigg said a ruling against the law would hurt hospitals more than insurers, which have less risk from uninsured people. Still, they would probably experience reduced enrollment revenue if a ruling to ban the subsidies is upheld.

The Healthcare.gov federal enrollment website is seen on a laptop computer as a man tries to sign up for a health insurance plan under the Affordable Care Act.