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High court health care decision good for some, not others

June 29, 2012

The Supreme Court's decision Thursday to uphold President Barack Obama's historic overhaul is expected to boost many players in the health care industry, but not every corner of the sector will benefit.

Drugmakers, biotech companies, hospitals and insurers likely will get additional customers because the law requires nearly everyone to have health insurance or pay a fine, but medical device makers will be hit with a sizable tax on their sales imposed under the overhaul law, without the expectation of boosting sales sharply.

Here's what industry experts, company executives and analysts had to say:

—Now that the court has upheld the law, Michael B. McCallister, the Human Inc.'s CEO, said he wants to focus on improving it. Humana, based in Louisville, is the fifth largest health insurer.

"This is a big bill with a lot of moving parts, and I think we'll continue to move full speed ahead," he said.

— BMO Capital analyst Dave Shove said in a research note that the court's ruling delivered no new surprises for the insurance industry, which has been preparing for the overhaul since it passed in 2010. But the decision does not affect all insurers equally.

"The bad news, for some players, is that the small-group and individual market will remain a tough sandbox to play in," Shove wrote.

—Bernstein analyst Ana Gupte said in a research note that the law will continue to remain "most onerous" for insurers like WellPoint Inc. Shares in Indianapolis-based WellPoint fell $3.59, or 5.1 percent, to close at $65.90 each Thursday.

WellPoint has a relatively high concentration of its enrollment in individual health insurance and employer-sponsored coverage for smaller companies. Those two segments are more exposed to reform restrictions and fees than other parts of the insurance business, such as coverage for employees of large companies. WellPoint is the second-largest health insurer, trailing only UnitedHealth Group Inc.

Gupte said companies like UnitedHealth, which draws its revenue from more diverse sources, will "win under all scenarios."

— Les Funtleyder, a health care fund manager at Poliwogg, a private equity fund for small investors, said: "Hospitals may be the biggest beneficiary because their biggest problem is people without insurance," Funtleyder said.

— The Medical Device Manufacturers Association, a trade group for the industry, said that Congress and the president must repeal the 2.3 percent tax that medical device makers will pay beginning in January. He argues that the tax will make it harder for companies to develop innovative new devices.

"It is clear that this misguided policy has already led to job losses and cuts to research and development," Mark Leahey, the group's president, said in a statement

— Avalere Health, a health research firm, released the following observations on the Supreme Court's decision regarding the law:

"The Supreme Court found common ground in the fact that the requirement to purchase insurance was really framed as a tax. So while the conservatives don't like the mandate and liberals aren't bothered by it, the center of the court agreed that it is permissible to penalize consumers who don't purchase insurance with financial penalties.

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