UPDATE 2-Hospital shares jump, insurers fall after Obama win

Wed Nov 7, 2012 12:06pm EST
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* Healthcare reform to move ahead
    * Hospital financials to improve
    * Insurers face regulation

 (Adds background, investor comments, updates stocks)
    By Caroline Humer
    Nov 7 (Reuters) - Shares of hospitals and other healthcare
companies that will benefit from President Barack Obama's health
reform legislation jumped on Wednesday after his election
victory, but health insurers fell as the law's costs became more
    Obama's re-election has taken a Republican vow to repeal the
health care reform off the table, though some industry
executives said on Wednesday that some aspects of the law still
may be changed or delayed.
    "I'm expecting some change in terms of how the affordable
care act might be rolled out, the timing as well as the form,"
Mark Thierer, chief executive of pharmacy benefits manager
Catamaran Corp., said in an interview, pointing to the
debate over the $600 billion fiscal cliff of spending cuts and
tax rises that could occur in January.
    The U.S. Patient Protection and Affordable Care Act is
expected to be mostly in place by the end of 2014. It is
expected to expand health insurance coverage to about 30 million
people over the next decade through both government-paid
insurance and private insurance available on health exchanges.
    The insurance expansion is based partly on the states taking
a larger role in Medicaid, the government health insurance
program for the poor, and in running private health insurance
exchanges where consumers can buy policies.
    Providers like hospitals and doctors, medical device makers,
drug companies, prescription management companies, and health
insurers are all affected by the law. 
    But investors were seeing the most potential for improvement
at hospitals, which have been dealing with high debt loads from
covering costs for care of the poor. As more of them are
insured, hospitals will pay less out of their own pockets.
    "Their bad debts will not be as big starting in 2014 as
millions of more people become insured. They'll either be
covered by Medicaid or purchase insurance through state
exchanges, and will receive government subsidies," said Michael
Liss a portfolio manager for American Century Investments. 
    Shares of HCA, the largest for-profit hospital chain in the
United States, rose 7.2 percent to $33.16. Tenet Healthcare
Corp. gained 7.4 percent to $26.81, and Community Health
Systems was up 5.6 percent to $30.28.
    Pharmaceutical companies, medical device makers and medical
supply companies may face higher costs, depending on how the
law's independent payment advisory board operates, Liss said.
That board is tasked with keeping prices low.
    Election results were not viewed as favorable for healthcare
insurers with large employer-based businesses, including
UnitedHealth Group and Aetna, and their shares
were off. Healthcare reform sets limits on the companies'
profits and mandates on coverage.
    UnitedHealth dropped 4.5 percent to $53.85, and Aetna fell
3.7 percent to $42.96. 
    "There's a little bit of disappointment that you're not
going to see any easing of the regulations on the insurance
industry that are going to be put into place under the
Affordable Care Act. At the same time it's not a change in the
current operating environment. It's mostly just a change in
expectations," Leerink Swann analyst Jason Gurda said.
    Healthcare reform is, however, expected to help insurers
that cater to the poor through Medicaid as more states are
expected to expand their programs under Obama, Shares in Centene
Corp., for instance, rose 6.7 percent to $42.54

 (Reporting By Caroline Humer and Ransdall Pierson; Editing by
Leslie Adler)