A Tale of Two Supreme Courts on Obamacare

NEW YORK ( TheStreet) -- Health insurers continued to rally Friday on indications that even if the U.S. Supreme Court struck down the Affordable Care Act (ACA), they wouldn't face long-term hitches.

But investors shouldn't be too quick to jump to conclusions from inferences to the justices' questioning from this week.

"People ended up now thinking that the whole thing would get struck down, ultimately because the Supreme Court says we're not going to go through 2,700 pages" of legislation, said a health care analyst, who spoke on background.

Health insurance stocks closed higher Friday along with the broader U.S. indices. UnitedHealth Group ( UNH) was at $58.98, up 87 cents or 1.5%; Aetna ( AET) climbed to $50.17, up 61 cents, or 1.2%; Cigna ( CI) jumped to $49.26, up 29 cents, or 0.59%; Coventry ( CVH) was at $35.57, up 97 cents, or 2.8%; WellPoint ( WLP) rose to $73.81, up $2.19, or about 3.1%; and Humana ( HUM) closed at $92.49, up 95 cents, or about 1%.

Jefferies & Co. initiated coverage on three managed-care companies Friday, doling out buy ratings for AmeriGroup and Centene Corp, and a hold rating on Molina Healthcare. Among the reasons the firm gave for bullishness about the sector were a robust Medicaid RFP pipeline, dual eligibles and the possibility of 2014 Medicaid expansion.

It's possible, though, that the ACA will be struck down, which could wipe out Medicaid expansion. It's also entirely feasible that Obamacare will be upheld in June -- a scenario that would seemingly contradict the reason for Friday's rally.

Here's why investors and Americans shouldn't assume either outcome.

There's enough uncertainty to claim Chief Justice John Roberts and Associate Justice Anthony Kennedy will uphold Obamacare.

"If you're Roberts, who left himself with wiggle room, who asked hard questions on both sides, ... I think Roberts is sensitive to the role ... of the courts and public opinion about the courts, and those are enhanced to the extent the public doesn't think it's a purely partisan decision," says Hank Greely, a Stanford University law professor who clerked for former Justice Potter Stewart in the late 1970s. Greely discloses that he has publicly supported Obamacare.

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