Most major healthcare stocks rise modestly after House passes overhaul
Wall Street largely cheered Washington’s massive healthcare overhaul Monday, as shares of most healthcare companies rose modestly after Sunday’s vote by the House.
But investors were still trying to sort out winners and losers from the legislation. Shares of the nation’s two largest health insurers, UnitedHealth Group Inc. and WellPoint Inc., lost ground, while some smaller insurers were sharply higher.
Shares of many healthcare companies have rallied in recent weeks with the market as a whole, showing that investors weren’t fleeing the sector in fear of the Obama administration’s plans for the industry.
On Monday most major healthcare stocks were up, helping to lift broad market indexes. An index of 51 healthcare issues in the Standard & Poor’s 500 added 0.6%, while the S&P itself rose 0.5%.
With the bill’s passage, investors at least have that uncertainty out of the way, analysts said.
“There wasn’t anything specific that any investor wasn’t aware of before the vote -- other than whether it would pass,” said Jeffrey Loo, healthcare-sector analyst at Standard & Poor’s in New York.
The overhaul will provide insurance to an estimated 32 million Americans who lack coverage, partly by expanding government-financed programs for the poor.
Insurers in the individual market will be barred from denying coverage or raising insurance rates based on preexisting health conditions. The measure also will impose billions of dollars of new taxes on insurance plans and reduce funding for certain Medicare services.
WellPoint, which has 34 million policyholders across the country and is parent company of California’s Anthem Blue Cross, issued a cautionary forecast.
“Affordability is more important than ever before, and we remain concerned the bill passed [Sunday] does not address long-term cost-containment measures that will make the system sustainable,” spokeswoman Kristin Binns said in a statement. “We look forward to working with our elected officials in the coming months and years on this important issue.”
Executives of Cigna Corp. predicted that rising costs and new taxes would ultimately erode the quality of healthcare and burden policyholders as fees are passed to employers and their workers in the form of higher premiums. “I don’t think there has been a good accounting of what that looks like,” said Dr. Jeffrey Kang, Cigna’s chief medical officer. “At the end of the day, that will translate into increased prices.”
Here’s how stocks fared Monday by healthcare sector:
* Managed-care firms: Shares of the biggest companies in the sector were down, while some smaller and niche providers were rallying sharply. Among the giants, UnitedHealth Group fell $1.09, or 3.2%, to $33.30, and WellPoint dropped 68 cents, or 1%, to $64.39. But both are up more than 9% year to date, double the gain of the S&P 500.
Among smaller managed-care companies, Centene Corp., a St. Louis-based provider of Medicaid and Medicare programs, jumped $2.31, or 10.6%, to $24.14; Long Beach-based Molina Healthcare Inc., which serves low-income individuals and families, added 88 cents, or 3.6%, to $25.53.
* Hospital companies: Hospital operators posted some of the day’s biggest gains, on expectations that the legislation’s requirements would mean more patients. Tenet Healthcare Corp. rose 52 cents, or 9%, to $6.27; Health Management Associates Inc. shot up 92 cents, or 11.3%, to $9.05; LifePoint Hospitals Inc., which owns mostly non-urban hospitals in the South and West, rallied $2.07, or 5.8%, to $37.91.
* Drug companies: Major pharmaceutical issues were almost all higher in the session on the assumption that more people would be eligible for prescription drugs. The industry also will be taxed to help pay for expanded care, however.
Eli Lilly & Co. gained 37 cents, or 1%, to $36.54; Merck & Co. rose 24 cents, or 0.6%, to $38.30; generic drug firm Mylan Inc. was up 38 cents, or 1.7%, to $22.91.
Many medical device manufacturers also got a boost, including heart valve maker Medtronic Inc., up $1.01, or 2.3%, to $45.80, and orthopedic implant maker Zimmer Holdings Inc., up $1.23, or 2.2%, to $58.20.
Times staff writer Nathaniel Popper contributed to this report.