IBJNews

Judge's ruling raises uncertainty for health care execs

Back to TopCommentsE-mailPrintBookmark and Share

After a federal judge in Florida struck down the entire health reform law, investors shrugged. But the uncertainty for executives in health care companies increased.

Judge Richard Vinson was the second federal judge to say that the mandate in the Patient Protection and Affordable Care Act, which requires nearly all individuals to buy health insurance, exceeds Congress’ authority under the commerce clause of the U.S. Constitution. But Vinson far exceeded the December ruling of Judge Henry Hudson by declaring that the individual mandate cannot be separated from the rest of the law, meaning that the entire act must be struck down.

“The market's uncertainty about implementing the Affordability Act just went up exponentially with a second federal judge ruling against it. And, there is nothing like the whole thing being thrown out in a suit 26 states have brought,” wrote health insurance consultant Bob Laszewski on his blog on Monday.

Others, however, said that health care investors already had substantial doubts about the future of the health reform law—even before Vinson’s ruling came down Monday afternoon.

Shares of Indianapolis-based health insurer WellPoint Inc. and Indianapolis-based drugmaker Eli Lilly and Co. rose slightly on Tuesday, but in line with the broader markets. Publicly traded hospital chains—none of which have significant operations in the Indianapolis area—received a similar response from investors.

Barron’s magazine cited Citi analyst Gary Taylor in saying that hospital stocks would have already been trading at higher values if investors truly believed health reform would go ahead unchanged. That’s because the law would create federal subsidies to help 16 million extra Americans buy health insurance and another 16 million get health benefits through the federal-state Medicaid program.

That means 32 million more paying customers for hospitals, insurers and drug companies.

But with the Obama administration appealing all decisions against the law, health care companies and their investors will likely have to wait 18 months before the U.S. Supreme Court settles the legal questions about the law, noted Brian Betner, an attorney at Indianapolis-based health care law firm Hall Render Killian Heath & Lyman.

And even then, there are movements afoot in Congress to alter the law—including House Republicans' vote in January to outright repeal it.

All these clouds make life quite difficult for executives trying to find a winning business strategy.

“If you are a provider, do you now spend millions of dollars developing an Accountable Care Organization? Do you build that new building or make a big technology purchase?” Laszewski wrote. “If you run an insurance company, do you make a big strategic bet on exchanges or [are they] now marginal markets?”

ADVERTISEMENT

  • The end is near
    Health care costs doubled from 8 to 16 percent of the economy in just the last 10 years. They are on track to double again to 32 percent in the next ten and may rise faster as the boomers retire. The middle class can't afford this and will not allow it to happen, mandate or no mandate. The health care executives had better cash in their stock options now and prepare to downsize because a bursting economic bubble is a rough ride on the way down! Once people and companies give up on health insurance, only cost effective health care will have a market and the industry has long forgotten how to provide it!

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Kent's done a good job of putting together some good guests, intelligence and irreverence without the inane chatter of the other two shows. JMV is unlistenable, mostly because he doesn't do his homework and depends on non-sports stuff to keep HIM interested. Query and Shultz is a bit better, but lack of prep in their show certainly is evident. Sterling obviously workes harder than the other shows. We shall see if there is any way for a third signal with very little successful recent history to make it. I always say you have to give a show two years to grow into what it will become...

  2. Lafayette Square, Washington Square should be turned into office parks with office buildings, conversion, no access to the public at all. They should not be shopping malls and should be under tight security and used for professional offices instead of havens for crime. Their only useage is to do this or tear them down and replace them with high rise office parks with secured parking lots so that the crime in the areas is not allowed in. These are prime properties, but must be reused for other uses, professional office conversions with no loitering and no shopping makes sense, otherwise they have become hangouts long ago for gangs, groups of people who have no intent of spending money, and are only there for trouble and possibly crime, shoplifting, etc. I worked summers at SuperX Drugs in Lafayette Square in the 1970s and even then the shrinkage from shoplifting was 10-15 percent. No sense having shopping malls in these areas, they earn no revenue, attract crime, and are a blight on the city. All malls that are not of use should be repurposed or torn down by the city, condemned. One possibility would be to repourpose them as inside college campuses or as community centers, but then again, if the community is high crime, why bother.

  3. Straight No Chaser

  4. Seems the biggest use of TIF is for pet projects that improve Quality Of Life, allegedly, but they ignore other QOL issues that are of a more important and urgent nature. Keep it transparent and try not to get in ready, fire, Aim! mode. You do realize that business the Mayor said might be interested is probably going to want TIF too?

  5. Gary, I'm in complete agreement. The private entity should be required to pay IPL, and, if City parking meters are involved, the parking meter company. I was just pointing out how the poorly-structured parking meter deal affected the car share deal.

ADVERTISEMENT