The immediate reaction on Wall Street to last month’s U.S. Supreme Court ruling upholding President Obama’s health care law was to buy hospital stocks and dump health insurance stocks. But at least one analyst expects the long-term outcome to be exactly opposite of that.

Sheryl Skolnick, co-head of research at CRT Capital Group LLC, thinks hospitals face as much or more financial risk as health insurers under Obama’s Patient Protection and Affordable Care Act.

“The hospitals may end up paying for the poorest and sickest of today’s uninsured anyway AND see cuts in Medicare and Medicaid on top of that,” Skolnick wrote in a June 29 note to investors.

She added, “While not immune, health plans, who have already been whacked by nasty regulations imposed by reform, have generally shown the ability to generate strong cash flows in spite of those new limits on margins and profits, while the worst may be yet to come for the hospitals.”

Skolnick’s analysis rests on several risks she sees as likely, although others have discounted them.

First, several states may choose not to expand their Medicaid programs as called for by Obama’s health law. That’s because the Supreme Court ruling said the Obama administration could not threaten them even with removing their current Medicaid funding if they refuse to expand coverage to adults up to 133 percent of the federal poverty limit.

Already, Republican governors in Florida and Texas have said they will not expand their states’ Medicaid programs. Governors in Louisiana, Mississippi and South Carolina have hinted they might do the same.

Indiana Gov. Mitch Daniels has said he’ll leave the decision to his successor, who will be elected in November. The lack of a Medicaid expansion here could leave hospitals without nearly 250,000 newly insured customers they were expecting from health care reform.

But hospitals have already agreed to absorb $155 billion in reimbursement cuts in the federal Medicare program for seniors—the nation’s largest health insurance program. And Skolnick sees cuts to that program only getting deeper amid the budget and political fights in Washington, no matter who wins in the coming election.

If Republicans retake the White House and the Senate, they likely won’t repeal Obama's health law, but they are likely to de-fund it, Skolnick wrote. On top of that, House Republicans have twice passed a budget that includes deep cuts to the federal Medicare program.

“In other words, the Republicans are no friends of providers, in our view, and the election risk is likely to be meaningfully negative for the hospitals in particular,” Skolnick wrote. “Even in the absence of a GOP sweep,” she added, “the Democrats haven’t exactly been friends of Medicare, either.”

Hospitals were also counting on seeing more insured patients as a result of the Obama health law's subsidies to help individuals buy private insurance.

Health insurance investors are nervous that new rules imposed by health care reform will squeeze profits at such companies as Indianapolis-based WellPoint Inc. Its stock fell nearly 14 percent after the Supreme Court ruling and has only recovered about 4 percent since then.

Health insurance investors are also concerned that the small taxes that will be assessed to enforce the “individual mandate” that all Americans obtain health insurance will prove ineffective. That will mean they are required to cover sick patients they formally rejected for having pre-existing conditions, while healthy patients still go without insurance.

Such a scenario could force health insurers to offer hospitals reimbursement rates that are smaller than they have been, lessening the hospitals’ ability to offset the low payments they get from Medicare and Medicaid.

“The trick to reform working for the hospitals is the conversion of no-pay to paying heads in the beds AND volume expansion from demand by the newly insured to offset the cuts imposed to pay for it,” she wrote. “But that expansion has to happen at rates that are profitable to the hospitals and there is still no guarantee of that.”