By Jon Kamp Thursday's historic Supreme Court ruling upholding the U.S. health-care overhaul law sent stocks throughout the health-care sector in different directions by maintaining the promise of more people seeking services, but also new costs and other big changes. By upholding the politically contentious law, the high court keeps alive this complex mix of opportunities and pressure points, at least through November's elections. The law aims to extend coverage to tens of millions of Americans through state-based exchanges and a broader Medicaid program while imposing various cuts and taxes on health companies. Hospital operators broadly posted big gains because the upheld law promises coverage for millions of Americans who might otherwise seek care and stick hospitals with unpaid bills. Big managed-care firms--which are slated to get new customers from the law but also face earnings-compressing coverage requirements--traded lower. Overall, the NYSE Healthcare Index recently traded down about 1%, matching broader-market declines amid widely divergent moves throughout the health-care sector. Hospitals helped lead the charge higher, with HCA Holdings Inc. (HCA), the biggest investor-owned hospital company, jumping 7.8% in recent trading. Community Health Systems Inc. (CYH) rose 10.9% and Tenet Healthcare Corp. (THC) rose 7.6%. Hospitals are the "net winners" here, having won a best-case-scenario outcome, according to Goldman Sachs. Among big health insurers, UnitedHealth Group Inc. (UNH) fell 3.3%, Aetna Inc. (AET) sank 4.5% and WellPoint Inc. (WLP) declined 6.3%. Thursday's ruling keeps in place a law poised to add customers but also pressure earnings through new requirements, such as taking on people regardless of their health history and not charging more for pre-existing conditions. Predictions ahead of the ruling were all over the map, although expectations the law would be totally upheld declined significantly after oral arguments before the court in March. "Modest declines in the shares of commercial insurers suggest at least some investors expected the law to be struck down," Wells Fargo analyst Peter Costa said. According to Goldman Sachs analysis, earnings for big insurers would have been highest over the next four years if the law was struck down. Thursday's ruling was more of a middle-ground outcome for insurers amid investor hopes for more. Meantime, shares of Medicaid-focused insurers jumped on expectations that the health plan for the poor will expand to add millions more people, with WellCare Health Plans Inc. (WCG) up 8.9%, Amerigroup Corp. (AGP) up 4.3% and Molina Healthcare Inc. (MOH) up 4.1%. The high court said the federal government can't put sanctions on states' existing Medicaid funding if the states decline to go along with the expansion, but can withhold new funds if the states don't comply with the requirements. Shares were down in the medical-device sector, where the law means companies are set to start paying an excise tax on domestic sales next year. Medtronic Inc. (MDT), which has estimated a $120 million to $150 million annual impact, slid 1.2%. Spinal-device maker NuVasive Inc. (NUVA) declined 2.1%. Write to Jon Kamp at jon.kamp@dowjones.com
