Stock prices for hospitals were down in early trading on Monday amid uncertainty about the fate of the Affordable Care Act, which faces a hearing in November before the now 8-member Supreme Court.
Associate Justice Ruth Bader Ginsburg died Friday night and President Donald Trump and Senate Majority Leader Mitch McConnell (R-Ky.) have said they intend to try to fill her vacancy on the bench quickly. That introduces more uncertainty into the final decision on the latest ACA appeal on Nov. 10.
Healthcare investors were apparently spooked by the news on Monday. In early trading, hospital giant HCA Healthcare was trading down more than 9%, while Tenet Healthcare Corp. was down more than 15% and both Community Health Systems and Universal Health Services were down more than 12%.
"Markets don't like uncertainty and this adds another level of it going into an election that is already causing some angst," one analyst said.
Insurers fared better for the most part: UnitedHealth Group traded close to 5% lower and Anthem was down about 4%, but Medicaid-focused Centene Corp. was down over 8%.
Healthcare analysts expected hospitals may have some exposure because the uninsured rate would increase if the ACA were struck down, which would be a financial risk for healthcare providers.
It's difficult to predict how the case will play out. Buchanan Ingersoll & Rooney federal government relations practice group leader Mike Strazzella said it will be important to see who Trump's nominee is, and whether the individual is confirmed before oral arguments. A justice who isn't present for arguments can't vote to decide the case, though the court could decide to rehear a case later in the term.
Strazzella said if an ACA opponent is confirmed to the court before oral arguments, hospital executives should be concerned.
"I think if people are being worried that key pillars of the ACA being ripped down, that may be justified," Strazzella said.
If the case is split 4-4, the 5th U.S. Circuit Court of Appeals' decision would stand, meaning the case could take years to make its way back through the court system after a detailed severability analysis.
Several legal experts believe the arguments advanced by the Trump administration and Republican attorneys general may not convince a majority of the court to reject the ACA, even if a new justice is confirmed.
"It must be emphasized that the plaintiffs' arguments and lower court rulings in Texas remain remarkably weak, regardless of the makeup of the court," Georgetown health law professor and ACA expert Katie Keith wrote in Health Affairs.
Jonathan Adler, a professor at Case Western School of Law and Supreme Court expert, said he thinks a 4-4 split decision is unlikely given prior opinions some conservative justices.
"The approach to severability that the Chief Justice, and Justices [Brett] Kavanaugh and [Samuel] Alito have endorsed is not helpful for the plaintiff states," Adler said.
Trump says he intends to nominate a woman to fill the vacancy, and could announce his choice as soon as this week.