Shares rally on US Supreme Court decision

SHARES in US hospitals surged yesterday after the US Supreme Court upheld subsidies for individual Americans under President Barack Obama’s signature healthcare law.

Shares of several  hospital groups hit all-time highs on the decision, with investors welcoming the news that millions of insurance customers created by the 2010 Affordable Care Act (ACA), more often called “Obamacare”, would continue to use the healthcare system.

About 10m Americans have insurance through the healthcare law’s insurance exchanges. The Supreme Court case called into question 6.4m of those customers receiving subsidies.

The nine justices on the US high court ruled 6-3 that ACA did not limit subsidies to states that establish their own online healthcare exchanges.

The case, known as King v. Burwell, marked the second time in three years that the US Supreme Court has ruled against a major challenge to the politically divisive law.

Shares of Community Health Systems, a Fortune500 company, closed up nearly 13 per cent at $62.33 (£44.34), while shares of HCA Holdings finished up 7.4 per cent at $90.75 (£57.56). Tenet Healthcare jumped 13.4 per cent to $56.81 (£36.10) following the ruling and closed the day at $56.21 (£35.70). HCA, Universal Health Services and LifePoint Health all hit lifetime highs.

The share prices of insurers did not show as much movement, but analysts said that the High Court ruling was clearly a positive one for an industry that could have faced upheaval as it sits on the edge of consolidation.