The US health care industry breathed a cautious sigh of relief Friday after the Supreme Court’s surprise decision to uphold President Barack Obama’s sweeping reforms, even as politicians kept their swords drawn over the law.
After three years preparing billions of dollars of investment to implement Obama’s Affordable Care Act (ACA), hospitals, doctors, insurers and drug companies were mostly relieved about not facing yet another U-turn in policy.
But they also said there were many things they want to change in “Obamacare” — without completely killing it, as the president’s foes still promise to do.
Businesses and industry analysts had been prepared for more policy chaos and costly changes in the operating environment if the court overruled the complex law, which requires almost all Americans to have health insurance and seeks to cut costs in the medical system.
“The Supreme Court’s ruling removes a major source of uncertainty surrounding this important national issue,” said Julio Portalatin, president of Mercer, which advises companies on providing health insurance to workers.
In neutral language typical of many company comments Thursday, insurance giant Aetna said it was “prepared for the changes ahead and will continue to fully comply with the requirements of the Affordable Care Act.”
Investors roughly had the same view as health care stocks fell in line with the overall market, which closed down 0.2 per cent.
“The market didn’t really care about the outcome of the Obamacare ruling, as stocks were in the red beforehand and stayed there all the way to the finish line,” said Steve Reitmeister of Zacks Investment Research. The varied sectors of the industry reacted differently depending on the impact of the court’s decision on them. Hospital owners gained, with shares of the country’s largest group HCA leaping 10.8 per cent.
“The new law requires more Americans to have health coverage, reducing hospitals’ burden of unpaid bills from the uninsured,” explained David Evanson from stock analysts Canaccord. Insurers went the other way because although the ACA could expand the number of people buying insurance, it also forces the companies to extend coverage more broadly, potentially cutting their profits.
Typical was Wellpoint, whose stock lost 5.1 per cent Thursday, and Aetna, down 2.7 per cent.
“The legislation will put in place a handful of potentially profit-stifling requirements, such as covering people with pre-existing conditions,” said Evanson.
Share of major drug companies, who collectively negotiated a complex deal involving both costs and benefits with the White House when the ACA was being shaped, were mixed.
Pfizer was 0.4 per cent off, Merck gained 0.4 per cent, and biotech group Gilead lost 2.4 per cent. Nearly all groups said the law was imperfect and called for changes. Makers of medical devices remain angry over the ACA’s 2.3 per cent excise tax on their products, which they are challenging in Congress.
“The threat of the imminent tax has already led companies to move existing manufacturing jobs offshore and plan for future growth outside the US,” said Cook Medical’s chairman Steve Ferguson. Doctors also remained dubious, according to MDLinx, which surveyed 243 primary care physicians after the ruling.
With the ACA potentially cutting insurance payments to doctors, 22 per cent felt its promise of a larger insured population would benefit their practices, while 45.7 per cent expected “an extremely negative impact,” the company said.
But analysts said policy uncertainty remains a big problem, despite the relief after the court ruling.
The primary uncertainty is whether Obama will be re-elected in November. His Republican rival for the White House, Mitt Romney, has repeatedly vowed to kill the law if he is elected.
“What the court did not do on the last day in session, I will do on my first day if elected president of the United States, and that is that I will act to repeal ‘Obamacare,'” he said Thursday.
On the other hand, with enough of the industry seeing benefits in the law, and already having invested in its implementation, a Republican administration and Congress bent on scrapping Obamacare might run into stiff opposition from big health care businesses.
Washington, June 29, 2012 (AFP)