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Healthcare shares are falling as a result of uncertainty over the Supreme Court docket and Obamacare

Affordable Care Act advocates celebrate as health care opinion is released in Washington Supreme Court on June 25, 2015.

Al Drago | CQ appeal

Health insurers and hospitals stocks sold out heavily on Monday following the death of Supreme Court Justice Ruth Bader Ginsburg and the looming battle to confirm her replacement. Analysts say this is creating a new level of uncertainty about the future of the Affordable Care Act, also known as Obamacare.

"It sounds like the Republicans are really pushing for a Supreme Court candidate to be approved before the new administration (and) fears the ACA is likely to be overturned," said Jefferies health analyst Brian Tanquilut, adding: " I'm not sure that's necessarily the case, but obviously that's the fear that's just burned into the stocks. "

The shares of Medicaid insurers Centene and Molina Health fell around 8.5%. The ACA helped grow Medicaid in states that have expanded coverage to low-income and poor adults.

Hospital operator inventories also decreased, with Tenet Healthcare down 13%, Universal Health Services down 8.6% and Community Health Systems down 6%. Investors fear that the ACA's repeal could result in higher uncompensated care for facilities if millions lost health insurance.

The Supreme Court will hear Obamacare's latest constitutional challenge, the post-election California v Texas case on November 10th. If a new judiciary were established in time for this case to be heard, it could balance the court's decision in favor of annulment.

"If the case is debated in a new Supreme Court with a new judiciary, the focus and court will no longer be with Chief Justice Roberts, who has dismissed too much stronger challenges to the law. It will be." with the other Conservative judges, "said Professor Nicholas Bagley of the University of Michigan Law School, adding that he thought the fears were exaggerated.

"The question is whether these conservative judges will all be voting to overturn the Affordable Care Act based on this case … I think it's not likely," he said.

The current case before the Supreme Court focuses on the question of the individual mandate. The Trump administration and Republican states argue that the ACA was effectively voided when Congress lowered the penalty for Obamacare's individual mandate to $ 0. Chief Justice John Roberts cast the resolute vote in 2012 to uphold Obamacare by ruling that the individual mandate penalty equals a tax.

"There's a long way to go between a solid Conservative majority and complete abolition of the law," said Douglas Holtz-Eakin, president of the American bipartisan forum and former economic policy director, on the consequences of repealing the law for 2008 Republican presidential candidate John McCain. "They could end up in different places to avoid total disruption. We have seen them do that in the past."

Capitol Street health analyst Ipsita Smolinski says the struggle for a conservative justice system ahead of the November elections will likely rally Protestant voters against President Trump's abortion.

"Getting someone through quickly who may be for life can strengthen that base," said Smolinski, while adding that could motivate pro-choice voters as well. "It cuts both ways, but I honestly think it helps Trump more."

JP Morgan analyst Gary Taylor downgraded hospital stocks Monday morning due to heightened economic and election uncertainty. He argues that the verification battle for Ginsburg's replacement could favor Democratic candidate Joe Biden and pave the way for a Democratic election in November.

"Ruth Bader Ginsburg's unfortunate death may help energize the democratic elections, campaign contributions and turnout. Hence, the electoral overhang in this sector is due to Joe Biden's support for an" option for public health insurance ". , Medicare Eligibility Lowering and Senate Deposition The filibuster is likely to increase, "Taylor wrote in a message to customers.

According to voters polled by the American Action Forum, much will be at stake for both sides to make sure something is in place when the court knocks down the ACA.

"The majority of Republicans and Democrats said that they did not touch these programs, which is really very noticeable," said Holtz-Eakin in this partisan environment.

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