Dec 17 (Reuters) - Shares of health insurers, hospitals, and healthcare companies fell in early trading on Monday, after a federal judge ruled the Affordable Care Act (ACA), also known as Obamacare, unconstitutional late last week.
The ACA, introduced by former U.S. President Barack Obama in 2010 to provide affordable healthcare to all Americans, mandates that all individuals have health insurance or pay a tax.
But on Friday, Texas District Judge Reed O’Connor agreed with a coalition of 20 states that a change in tax law last year eliminating a penalty for not having health insurance invalidated the entire Obamacare law.
Centene Corp fell 7.8 percent to $117.5, while Molina Healthcare slumped 10.1 percent to $118.4. The companies are among health insurers with exposure to ACA.
WellCare Health Plans and Anthem Inc declined 4.7 percent and 2.1 percent, respectively.
“While we are disappointed in the recent Northern District of Texas court’s ACA ruling, we recognize that this is a first step in what will be a lengthy appeals process,” Molina Healthcare said.
“Regardless, the ACA will remain in effect for 2019, and we are optimistic that it will remain in effect thereafter.”
Brokerage Evercore ISI said it expected no immediate impact from the ruling, calling it only a declaratory judgment and not an injunction.
Even in case of an eventual injunction, the defendants would certainly seek and most likely get a stay pending appeal, Evercore said.
Hospitals and healthcare services providers Community Health Systems, Tenet Healthcare Corp and HCA Healthcare Inc fell between 4 percent and 8 percent.
Reporting by Manogna Maddipatla in Bengaluru