Please ensure Javascript is enabled for purposes of website accessibility

Supreme Court Refuses to Hear Obamacare Case, Health Insurer Stocks Breathe Sigh of Relief

By Taylor Carmichael - Jan 21, 2020 at 12:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When a federal district judge invalidated the Affordable Care Act a year ago, many healthcare stocks got whacked.

Today, the Supreme Court refused to hear an Obamacare case.

When federal district court judge Reed O'Connor held that Obamacare was unconstitutional in December 2018, health insurance stocks crashed hard. Molina Healthcare (MOH 0.57%) dropped 8.9%. Tenet Healthcare (THC 4.47%) lost 6.8%; Cigna (CI) fell 3.3%.

Last month, a federal court of appeals partially reversed the district court's opinion, sending the case back down to be reheard. That news left the Affordable Care Act in place for the time being, and health insurance shareholders were happy again. Centene (CNC -0.83%) jumped up 4% and Molina rose 3%. Shares of Wellcare (WCG) went up over 2%. 

judge's gavel

Image source: Getty Images

Democrats tried to argue that this Obamacare case is an emergency and the Supreme Court needed to hear it right away. Not surprisingly, the Supreme Court decided it's not an emergency, and in a one-sentence ruling declined to hear the case now. (This ruling does not affect the Supreme Court's authority to hear the case down the road).

In 2012, the Supreme Court upheld the constitutionality of Obamacare's individual mandate, holding that Congress has the authority to pass this legislation under its power to tax. Congress since voided the tax provision that was the basis of the individual mandate, inspiring more litigation. 

In December, the federal court of appeals ruled that the individual mandate in Obamacare is now unconstitutional because without a tax provision, Congress has no authority to force people to be covered by health insurance. 

Since the Supreme Court refused to hear the emergency appeal, it's up to Judge O'Connor to decide if any part of Obamacare remains valid. The market didn't expect the Supreme Court to grant an emergency review, so health insurance stocks remain mixed on today's news.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Centene Corporation Stock Quote
Centene Corporation
$82.95 (-0.83%) $0.69
Molina Healthcare, Inc. Stock Quote
Molina Healthcare, Inc.
$267.13 (0.57%) $1.52
Cigna Corporation Stock Quote
Cigna Corporation
WellCare Health Plans, Inc. Stock Quote
WellCare Health Plans, Inc.
Tenet Healthcare Corp. Stock Quote
Tenet Healthcare Corp.
$58.24 (4.47%) $2.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.