Jan 23, 2017

Health care stocks fall after Obamacare executive order

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Data: Yahoo Finance; Chart: Lazaro Gamio / Axios

President Trump's executive order on Obamacare has already had a business impact: Stocks of publicly traded hospital and health insurance companies traded down once the markets opened Monday.

Although the executive order didn't alter any laws and mostly renewed the well-known animosity Republicans have for Obamacare, investors were spooked at the prospect of important provisions getting tossed out in a repeal. The order specifically called on federal agencies to ease any regulations viewed as harmful, such as the individual mandate.

Many of the stocks recovered slightly by the time the markets closed Monday — but not insurers and hospitals that have the most on the line if the law is repealed.

An insurance market without a mandate to buy coverage, but with the requirement that insurers cover everyone regardless of their medical history, would almost certainly lead to higher premiums and a collapse of the market. That would mean fewer insured patients and more bad debt for hospitals and fewer paying customers for insurers. These were the stocks most impacted Monday.

Hospital stocks that fell: HCA, Tenet Healthcare, Community Health Systems, LifePoint Health, Universal Health Services and Quorum Health. The companies with more rural hospitals (like Community and its spinoff Quorum) dropped more.

Health insurance stocks that fell: Anthem, Centene and Molina Healthcare, all of which have the most exposure to the individual Obamacare marketplaces. At the end of the day, many of the stocks had recovered a bit. Companies such as Molina and Community ended the day most in the red because they are most vulnerable to shifts in Obamacare policy.

Health insurance stocks that were faring better: Aetna, Humana and UnitedHealth Group. Each of these companies had bailed on the Obamacare exchanges and therefore have less to lose. They will also benefit a lot more if the health insurance tax is permanently repealed.

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