IBJNews

Supreme skepticism boosts WellPoint stock

Back to TopCommentsE-mailPrintBookmark and Share

However the U.S. Supreme Court ends up ruling on President Obama’s health reform law, WellPoint Inc. and its health insurance peers already owe a big thank you to the nation’s top justices.

Indianapolis-based WellPoint’s stock price shot up nearly 11 percent last week—and its peers weren’t far behind. That’s because investors, like most observers, didn’t expect such harsh questioning of the law from even perceived “swing“ votes on the court, such as Chief Justice John Roberts and Justice Anthony Kennedy.

"Going into the debate on the mandate, there was almost a sense of complacency out there that the mandate would stand, as would the law," CRT Capital analyst Sheryl Skolnick told the Reuters news service. "Investors were thrown a curve ball."

The favorable reaction from Wall Street came not only because harsh questioning by the court’s conservative justices put in doubt the law’s “individual mandate” that all Americans buy health insurance, but also because the justices raised the possibility that they would strike down requirements that insurers accept all customers, regardless if they are already sick or not.

The Obama administration itself argued that the justices, if they decide that the individual mandate is unconstitutional, also should eliminate the law’s requirements that health insurers accept all patients and another provision that says insurers must base all customers’ premiums on the health of the entire “community” in which that person lives, not on his or her individual health status.

The group of 26 states—including Indiana—that filed the lawsuit challenging the health reform law pushed the justices further, saying that if the individual mandate falls, the entire law should be thrown out with it.

From investors’ standpoint, either result would be better for health insurers than the worst-case scenario they feared: that the individual mandate would be struck down while the other requirements would stand.

That outcome would have prevented WellPoint and its peers from gaining some 30 million new customers, while still leaving them on the hook to pay the bills of patients who waited until they were sick to start paying premiums—premiums that would be restricted in price by the overall health of the community.

The stock prices of WellPoint’s main competitors—Hartford-based Aetna Inc., Philadelphia-based Cigna Corp., Louisville-based Humana Inc., and Minnesota-based UnitedHealth Group—each saw their stock prices rise between 7 percent and 10 percent last week.

"People at this point have pretty much dismissed the potential for an adverse outcome here, which would be the individual mandate gets tossed and everything else remains the same," Susquehanna Financial Group analyst Chris Rigg told Reuters.

That’s the current sentiment, but it is far from certain, Indianapolis health care attorneys Greg Pemberton and Taryn Stone noted in written commentary about last week’s hearings on the Patient Protection and Affordable Care Act.

“Ultimately, the challenge to the severability of the individual mandate provision from the rest of the Act is fundamentally a question of congressional intent. Would Congress have intended the entire Act to fall if the individual mandate is found unconstitutional?” wrote Pemberton and Stone, who are part of the law firm Ice Miller LLP. They concluded, “At this point, there is no clear indication on how the Court will rule.”

ADVERTISEMENT

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. We gotta stop this Senior crime. Perhaps long jail terms for these old boozers is in order. There are times these days (more rather than less) when this state makes me sick.

  2. One option is to redistribute the payroll tax already collected by the State. A greater share could be allocated to the county of the workplace location as opposed to the county of residency. Not a new tax, just re-allocate what is currently collected.

  3. Have to agree with Mal Burgess. The biggest problem is massive family breakdown in these neighborhoods. While there are a lot of similiarities, there is a MASSIVE difference between 46218 and 46219. 46219 is diluted by some stable areas, and that's probably where the officers live. Incentivizing is fine, but don't criticize officers for choosing not to live in these neighbor hoods. They have to have a break from what is arguably one of the highest stress job in the land. And you'll have to give me hard evidence that putting officers there is going to make a significant difference. Solid family units, responsible fathers, siblings with the same fathers, engaged parents, commitment to education, respect for the rule of law and the importance of work/a job. If the families and the schools (and society) will support these, THEN we can make a difference.

  4. @Agreed, when you dine in Marion County, the taxes paid on that meal go to state coffers (in the form of the normal sales taxes) and to the sports/entertainment venues operated by the CIB. The sales taxes on your clothing and supplies just go to the state. The ONLY way those purchases help out Indianapolis is through the payroll taxes paid by the (generally low-wage) hourly workers serving you.

  5. The government leaders of Carmel wouldn't last a week trying to manage Indianapolis. There's a major difference between running a suburb with virtually no one below the poverty level and running a city in which 21+% are below the poverty level. (http://www.census.gov/did/www/saipe/data/interactive/#view=StateAndCounty&utilBtn=&yLB=0&stLB=15&cLB=49&dLB=0&gLB=0&usSts_cbSelected=false&usTot_cbSelected=true&stateTot_cbSelected=true&pLB=0?ltiYearSelected=false?ltiYearAlertFlag=false?StateFlag=false?validSDYearsFlag=false)

ADVERTISEMENT