It isn’t every day that the Supreme Court gives a jolt to 18 percent of the American economy.
Of course I’m talking about the health care industry, and maybe it’s a stretch to use a word like jolt to describe the impact of any decision that essentially upholds an enacted law.
But the court news caught me by surprise, and I had plenty of company. The ruling altered conventional wisdom on health care, even if the law still faces another challenge in the presidential election this fall.
Anyone who believes that the cost and complexity of the health care law would deal a serious blow to the nation’s economy didn’t see that concern reflected in the stock market Thursday. Big market indexes fell moderately on news of the ruling, but stocks were already down. Investors were much more worried about banking-sector problems and the latest economic waffling in Europe.
Drill down to stocks of big health care companies, the businesses driving that 18 percent of the economy, and you’ll see more interesting activity. Overall, those stocks lost modest ground on Thursday.
Why did a court ruling that affirmed the creation of 30 million new insured (read: paying) health care customers fail to boost most of the industry’s big stocks? In a phrase that applies to every aspect of President Obama’s health care law: It’s complicated.
That law creates lots of health care business opportunities, but it also assesses lots of taxes and other costs on the industry to help pay for universal coverage, and the Supreme Court affirmed that mixed bag. The bigger health care picture is filled with winners, losers, and many in between.
Here’s a brief breakdown:
Hospitals: The big winner in court and the stock market Thursday. Hospitals are left with bad debts when they treat uninsured patients and don’t get paid. That will be a much smaller problem when nearly everyone is insured.
Shares of HCA Holdings Inc., the nation’s biggest hospital company, jumped 10.8 percent Thursday. Tenet Healthcare Corp. stock rose 5.4 percent, and Community Health Systems Inc. shares advanced 8.9 percent.
Drug companies: a mixed bag. Big pharmaceutical companies will certainly see more business volume, but the health care law does a number of things to squeeze them financially. Drug makers agreed to provide $100 billion in taxes and product discounts over 10 years to avoid the threat of even deeper price cuts in government health services.
Most big drug stocks remained little changed Thursday. Only GlaxoSmithKline PLC (down 1.6 percent), AstraZeneca PLC (up 1.05 percent), and Bayer AG (down 1.88 percent) saw price swings of more than 1 percent.
Medical device makers: the clear loser in the health care law and the court decision upholding it. Device companies will pay a 2.3 percent excise tax on FDA-approved hardware, a bill expected to reach $20 billion by 2019. But those companies probably won’t see a surge of new business because Medicare already pays for a large percentage of their business.
Most medical device stocks fell about 1 percent Thursday. Our biggest local medical hardware company, Boston Scientific Corp. of Natick, saw its shares slump 1.6 percent.
Health insurance companies: a complicated picture. Insurers will pick up lots of new business, but the law that creates them comes with strings attached. For one, the law prohibits insurers from discriminating against patients with preexisting medical conditions.
Managed care companies like Molina Healthcare Inc. (up 8.6 percent) should grow with the health law. Most big insurers such as Aetna Inc. (down 2.7 percent) lost value Thursday. Stock market prices are just snapshots in time. The health care law still faces challenges. Implementation would open the door for unintended consequences. But the long-awaited court decision is a big step forward that investors seemed to take in stride.
The red herring
Genworth Financial Inc. shares jumped Thursday when Boston hedge fund firm Highfields Capital Management said it was in talks with management about increasing the value of its stake. Highfields owns about 5.2 percent of Genworth, a life insurer and mortgage guarantor. Genworth shares climbed 11 percent to $5.43 each.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.