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Supreme diagnosis for healthcare stocks

Wednesday, March 28, 2012 - 02:11

March 28 - As the U.S. Supreme Court wrapped up its final day of hearing arguments about the constitutionality of President Obama's signature healthcare reform, analysts contemplate winners and losers among the healthcare sector. Jill Bennett reports.

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PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL A battle of wills on the steps of the nation's highest court as the Supreme Court considers whether President Obama's healthcare law must fall without its crown jewel: the mandate that all Americans buy insurance by 2014 or face a penalty. The law, which constitutes the biggest overhaul to the U.S. healthcare system in nearly 50 years, has far reaching consequences on company costs, consumer wallets and the entire healthcare sector. Alex Morozov is the Director of Healthcare Equity Research at Morningstar: SOUNDBITE: ALEX MOROZOV, DIRECTOR, HEALTHCARE EQUITY RESEARCH, MORNINGSTAR (ENGLISH) SAYING: "If the law is upheld but the mandate is tossed out we definitely see healthcare providers be in the loser bucket so companies like HCA, CommunityHealth, those are companies that really reliant on patients, insured patients, as opposed to the currently uninsured patients, that are hitting their ER's." Mororoz says managed care is a loser in general if the mandate is tossed, assuming other provisions remain, with WellPoint likely to feel the biggest pinch. If the law and mandate are upheld Morozov says Medicaid-focused managed care companies like Amerigroup will be the biggest winners. And, medical device maker Stryker, would be a big beneficiary if the entire law is struck down by the Supreme Court. Some change to the law would likely have an adverse effect on lab services company Quest Diagnostics, which relies on patient volume for revenue. SOUNDBITE: ALEX MOROZOV, DIRECTOR, HEALTHCARE EQUITY RESEARCH, MORNINGSTAR (ENGLISH) SAYING: "The entire healthcare sector somewhat in some way is touched by the healthcare law, some companies are probably more exposed to it than others but at the end of the day, the healthcare sector when you look at the fundamentals, the fundamentals are still great, when you have a massive demographic it's a benefit for the sector. And we look for companies that don't necessarily have 100% exposure to the U.S. market." The companies on Morningstar's list include drug makers Abbott Laboratories and Johnson & Johnson. Meantime, the nation's top judges are expected to announce a decision in June. Jill Bennett, Reuters

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Supreme diagnosis for healthcare stocks

Wednesday, March 28, 2012 - 02:11