The Supreme Court gave the nation's big insurers a wild ride this morning, as its landmark ruling upholding the Affordable Care Act trickled out in confusing, contradictory reports.
Incorrect initial reports on the ruling indicated that the court had struck down the individual mandate, a keystone of the sweeping law and a provision that insurers were counting on to meet their expanded coverage obligations under it. For several minutes shortly after the 10 a.m. EST decision, CNN, for one, carried a banner reporting that the court had struck down the mandate.
That sent insurance stocks plunging. Humana fell 3.5 percent, United Healthcare fell 5.4 percent, WellPoint plummeted 7.2 percent, and Aetna declined 3.8 percent. All four bounced back by between 5 percent and 6 percent when it emerged a few minutes later that the court had actually upheld the mandate, and indeed most of the existing law.
At mid-day, insurers' shares were still modestly down along with many pharmaceutical and medical-device makers, while some hospital stocks, notably HCA Holdings, flirted with double-digit gains.
The four stocks represent significant stakes in several healthcare funds. They comprise 34 percent, for example, of the Fidelity Select Medical Delivery fund (FSHCX).
The initial reports appeared to stem from the cable networks running with the opening comments of Chief Justice John Roberts, whose majority opinion opened by saying that the mandate was not constitutional under the commerce clause of the constitution. But as Justice Roberts, the deciding vote in the 5-4 decision, continued, it became clear that the court was upholding the mandate, as well as most of the law's other provisions.
Most analysts agree that a rejection of the mandate alone would have been the worst possible outcome for the major insurers. The ruling does not, however, put the healthcare issue to rest. Presumptive GOP presidential nominee Mitt Romney is vowing to repeal the law if elected in November.