Here’s the link to the decision–a 5-4 ruling with Chief Justice Roberts the tiebreaker–that upholds ObamaCare, including the individual mandate. The ruling does put a limit on the government’s ability to enforce the Medicaid expansion, noting that the federal government can’t withhold a state’s entire Medicaid funding as punishment if the state decides not to implement the expansion.
“It is likely that at least some of the most dogmatic Republican states will consider opting out despite the fact that the federal government is picking up 100% of costs through 2016 and 90% beyond,” says Justin Lake of J.P. Morgan. Florida and Texas would be two states to watch.
Either way, the ruling is viewed as positive for managed Medicaid stocks. “There’s joy in the Medicaid world today,” says Carl McDonald of Citi. In morning trading, pure-play Medicaid health plan stocks are up considerably (Amerigroup, +4%; Centene, +4%; Molina, +4%; and WellCare, +9%).
However, diversified health plans are way down (Aetna, -5%; Cigna, -5%; Coventry, -3%; Health Net, -4%; Humana, -3%; and WellPoint, -6%). Christine Arnold of Cowen notes that companies like Aetna, United and WellPoint had the most to gain if the court struck down the individual mandate, guaranteed issue and community rating–which threaten profit margins in the individual and small group markets.
Overall, I like Austin Frakt’s comments on the ruling:
Though the Supreme Court’s ruling on the ACA has many implications, what its focus on the law doesn’t do by itself is make progress on the problems of cost, quality, and access in our health care system. Those problems remain in approximately the same state they were in when the ACA was passed in 2010. That law is an attempt to begin to address each of them, to various degrees and over time. But even its strongest advocates know it is only a first step. If health reform is to be further advanced, it will be through legislation, not litigation.
I also enjoyed a sound bite I heard on the radio (sorry, I didn’t catch the speaker’s name) that the ruling means healthcare in the U.S. will be more like the National Football League than Major League Baseball.