Stock trades may show Obamacare leak from Supreme Court
The Supreme Court’s stunning rejuvenation of the Obamacare mandate into a new tax didn’t leak to Washington D.C. insiders — but it appears that it may have leaked to yet-unknown Wall Street investors.
In a brief 10-minute period starting at 9:32 a.m., the stock value of the nation’s largest hospital chain, HCA Holdings Inc., jumped from $26.81 per share to $27.53 as bidders bought several hundred thousand shares before the court made its announcement just after 10 a.m.
The bidders who snatched up shares before the announcement made a gain of roughly $2 a share once the price rose again after the court officially announced its backing for the law.
The bidding and the price jump came more than 30 minutes before Chief Justice John Roberts read his unexpected decision from the bench.
At roughly 10:06 a.m., Roberts announced that the law was constitutional, providing it was reinterpreted as a tax increase.
In 2010, the law was passed by Congress and signed by President Barack Obama as a federal mandate on personal conduct — not as a tax.
Had the court struck down the law, the hospitals’ stock price would likely have fallen — costing the secret buyers much of their cash — because the hospitals stand to gain revenue from the Obamacare law.
The law uses government power to funnel patients — including people with new government-provided insurance policies — toward existing hospitals, including HCA’s hospitals.
In contrast to HCA, there was little trading — and little movement in the stock price — of other hospital chains before the public announcement.
The absence of movement in their other companies’ stocks suggest that a few bidders targeted HCA’s stock.
The absence of movement in other companies’ stocks also suggests that the HCA investment was not driven by software analysis of the hospital sector.
Google’s stock-tracking page shows that several hundred thousand shares were bought before the announcement.
HCA’s hospitals are managed by the Hospital Corporation of America, based in Nashville, Tenn.
Once the court publicly revealed its support for the controversial law, HCA’s stock climbed again to roughly $29 and stayed there throughout the day.
The day’s total gains pushed the company’s market-value up to $12.93 billion.
That’s a one-day gain of roughly $1 billion, courtesy of federal support for the well-connected hospital chain.
In contrast, there was no movement in the stock value of three other hospital companies prior to the court’s announcement. But, several hospital chains jumped in value once the court validated the law.
At 10:10 a.m., the stock value of Health Management Associates jumped from $6.86 per share to $7.58 per share.
The stock value of Universal Health Services didn’t move until 10:06 a.m., when it moved from $39.79 up to $42.64 by 10:18. Then it dropped, before settling at roughly $42.00 for the rest of the day.
Tenet Healthcare Corporation stayed stable until 10:06 a.m., when it jumped from $4.85 per share to $5.24 by 10:08.
The post-announcement jumps boosted the stock values of Health Management Associates, Universal Health Services and Tenet Healthcare Corporation by roughly $300 million, $350 million and $100 million, respectively.