Healthcare stocks plunge amid broad market rout as Ruth Bader Ginsburg’s death creates uncertainty around Obamacare

Supreme Court
  • Heathcare stocks tanked on Monday after the death of Justice Ruth Bader Ginsburg threw the future of the Affordable Care Act into jeopardy.
  • The Trump administration’s challenge to the ACA is set to reach the Supreme Court on November 10. With Trump and Senate Republicans rushing to fill Ginsburg’s seat, a strengthened conservative majority is far more likely to reverse the law.
  • Sector giants including Johnson & Johnson, UnitedHealth Group, and Amgen tumbled through the session.
  • Several analysts lowered ratings on healthcare stocks, saying Ginsburg’s death clouded revenue estimates.
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Healthcare stocks tumbled on Monday after the death of Justice Ruth Bader Ginsburg sparked concerns that the Supreme Court may dismantle Obamacare and roil the health insurance industry.

Senate Republicans and the Trump administration have already set out to fill Ginsburg’s court seat ahead of the US presidential election in November. Should their efforts succeed, a strong conservative majority in the nation’s highest court is more likely to gut the Affordable Care Act. The Trump administration’s challenge to the law is slated to reach the Supreme Court on November 10, leaving time for the White House and Senate Majority Leader Mitch McConnell to push a candidate through the confirmation process.

More than 20 million Americans depend on the ACA for their health insurance. A reversal of the law would all but certainly lower revenue across insurers, hospitals, and other healthcare companies. A final decision on the Obamacare challenge is expected in the first half of 2021.

Sector giant Johnson & Johnson sank as much as 3.3% in Monday trading. UnitedHealth Group fell as much as 5.3%, and new Dow Jones industrial average constituent Amgen dropped 3.7% at intraday lows.

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A slew of analyst downgrades added to the sector’s decline. JPMorgan lowered ratings on Universal Health Services, HCA Healthcare, and Tenet Healthcare, saying Ginsburg’s death boosted risks of weaker revenue. Cowen and Evercore ISI also shifted ratings in response to Ginsburg’s death.

UBS adjusted its election-focused report on Monday as well, but strayed from lowering its outlook on healthcare stocks.

“With the sector trading at its lowest valuation relative to the market in at least 25 years, we think a good deal of uncertainty is already priced into the sector,” the bank said.

The Health Care Select Sector SPDR ETF – which tracks the S&P 500’s healthcare sector – traded at $102.32 as of 11:55 a.m. ET Monday, up 0.5% year-to-date and down 2.7% from Friday’s close.

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