Dive Brief:
- Investors do not appear particularly concerned about the outcome of King v. Burwell, in which a decision expected by the Supreme Court this month could wipe out subsidies for many using the federal health exchange—and potentially impact those in the healthcare industry that have benefitted from the expansion of coverage under the ACA.
- Many are counting on the expectation that even if subsidies are struck down, legislators will implement alternative solutions for those affected, and that the court might even stay its enforcement until those alternatives are in place.
- Experts suggest that a negative ruling could cause an initial selloff of healthcare stocks but that the market would quickly rebound.
Dive Insight:
Even with the Supreme Court's decision looming, investors seem bullish on healthcare, Reuters notes.
"Option activity over the last few weeks in hospital stocks suggests that the options market is betting on a post-Supreme Court decision rally," the news service quoted Anshul Agarwal, equity derivative strategist at Bay Crest Partners in New York.
Investors have been pushing up many major provider and payer stocks in the time since the court first heard the arguments in the case; for example, HCA is up more than 18%, Tenet is up 11.8%, Aetna is up 18.1% and Anthem is up 12.3%.
As Reuters points out, the S&P healthcare index .SPXHC has gone up 9.6% so far in 2015, which makes it the top-performing S&P 500 sector. At the same time, whether the ruling is positive or negative, traders are bracing themselves for an increase in volatility.