This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Medicaid HMOs Soar on Obamacare Victory

NEW YORK ( TheStreet) -- Medicaid HMOs were soaring Thursday on the Supreme Court's decision to uphold Obamacare as some 16 million to 20 million new Americans could become eligible to enroll in the government program in 2014.

Shares of Amerigroup (AGP) were at $66.33, up $3.93 or 6.3%, Molina (MOH - Get Report) was at $22.92, up $1.66, or 7.8%, and Centene (CNC - Get Report) traded at $31.51, up $1.57, or 5.3%.

"I would say the stocks hadn't really baked in much value for Medicaid expansion," said David Windley, a health care analyst at Jefferies.

The court ruled that the legislation could not force states to expand Medicaid, which means bigger states that tend to lean more politically conservative -- like Texas and Florida -- could opt out of the Medicaid expansion program.

Windley said there would be more upside than downside for Medicaid HMOs on this decision, as many states -- California, New York and others that tend more politically liberal -- would likely participate in the 2014 expansion. Simply, whatever happens on a state-by-state basis, there are still millions of new Americans who would likely enroll into Medicaid and boost revenue for the companies that help provide that care.

Chief Justice John Roberts, joined by Justice Stephen Breyer and Justice Elana Kagan, wrote that Congress can't take away states' existing funding if they don't adhere to Medicaid expansion. Justice Ruth Bader Ginsburg and Justice Sonya Sotomayor did not make that case; however, the five justices in the majority agreed that Congress could not impose a penalty against the states.

"So technically, the Court does not find that even that part [Medicaid expansion] of the statute is unconstitutional," said Greg Magarian, a law professor at Washington University in St. Louis.

Magarian said that Roberts proved to be the true swing vote in the decision -- an outcome we reported in March could occur . (Magarian admitted, though, that he expected Kennedy to side with Roberts. Kennedy did not stand with the majority opinion).

The losers in Thursday's ruling were the diversified health care providers, which face regulatory pressures such as minimum medical loss ratios and rate reviews that could affect their bottom lines.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
WLP $136.01 1.43%
AET $112.27 0.00%
CNC $61.96 0.00%
MOH $51.76 0.00%
AAPL $93.74 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs