High court upholds Obama health law - Hospital stocks gain, insurers drop on the news
The United States Supreme Court on Thursday upheld the individual insurance requirement at the heart of President Barack Obama's historic health-care overhaul.
The decision means the huge overhaul, still only partly in effect, will proceed and pick up momentum over the next several years, affecting the way that countless Americans receive and pay for their personal medical care.
The ruling also hands Obama a campaign-season victory in rejecting arguments that Congress went too far in requiring most Americans to have health insurance or pay a penalty.
Chief Justice John Roberts announced the court's judgment that allows the law to go forward with its aim of covering more than 30 million uninsured Americans.
The justices rejected two of the administration's three arguments in support of the insurance requirement. But the court said the mandate can be construed as a tax. "Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness," Roberts said.
The court found problems with the law's expansion of Medicaid, but even there said the expansion could proceed as long as the federal government does not threaten to withhold states' entire Medicaid allotment if they don't take part in the law's extension.
The court's four liberal justices, Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor, joined Roberts in the outcome.
Justices Samuel Alito, Anthony Kennedy, Antonin Scalia and Clarence Thomas dissented.
"The act before us here exceeds federal power both in mandating the purchase of health insurance and in denying non-consenting states all Medicaid funding," the dissenters said in a joint statement.
Stocks of hospital companies rose sharply and insurance companies fell Thursday after the ruling was announced.
The stock of Hospital Corp of America, the largest private hospital chain in the US, rose a little more than seven per cent. Quest Diagnostics, which runs laboratories, rose almost three per cent.
Gary Taylor, a financial analyst for Citi Investment Research, wrote in a note to clients that the ruling was "a surprise win for hospital companies," which stand to benefit from tens of millions more people getting health insurance.
He cautioned that hospital stocks could "erase all their gains" from the court decision if Mitt Romney defeats Obama in the presidential election this fall. Romney has pledged to repeal the law.
Insurance companies were down sharply as analysts rushed to sort out the ruling. UnitedHealth Group stock fell almost three per cent, WellPoint six per cent and Aetna 3.6 per cent.
Stocks of the largest drug companies in the country were down but not heavily, in line with the broader market. Stocks of medical device makers were also down about the same as the broader market.