(Bloomberg News) Tenet Healthcare Corp. led hospitals and Medicaid insurers higher while commercial health plans led by WellPoint Inc. fell after the U.S. Supreme Court upheld most of President Barack Obama's health-care overhaul.
Tenet, the third-biggest hospital chain, rose 6.3 percent to $5.30 at 10:30 a.m. in New York trading with Medicaid plan Molina Healthcare Inc. climbing as much as 9 percent. Indianapolis-based WellPoint, the second-largest U.S. health insurer, declined 5.9 percent.
The court, voting 5-4, mostly left intact the Affordable Care Act's transformation of the health-care system, saying Congress has the power to make Americans get insurance or pay a penalty. The justices limited a plan to expand the Medicaid system for the poor by about 16 million people.
"No one in the hospital land really expected the entire law to be upheld," said Sheryl Skolnick, a health-care analyst at CRT Capital Markets in Stamford, Connecticut. "They expected something in the muddy middle. And with surprise, you get big swings."
Tenet has many hospitals in urban areas with large numbers of uninsured patients, making the Dallas-based chain a big winner from the law's coverage expansion, Skolnick said in a telephone interview. Likewise, Long Beach, California-based Molina and fellow insurers specializing in Medicaid are in line to win contracts from state governments expected to contract out much of that program's new enrollees.
WellPoint, the biggest seller of small-business and individual health plans, will win new customers from the law while facing regulations that may cut into profit margins.
"WellPoint will continue to move forward with our efforts to improve our nation's health-care delivery system," said Kristin Binns, a company spokeswoman, in an e-mail. "The road to implementing health-care reform will be a challenge, however, we look forward to working constructively with policymakers and other key stakeholders."
The Standard & Poor's Health-Care Index was down less than 1 percent, with drugmaker stocks mostly unchanged.