King ruling could stop big 5 insurers' stocks in their tracks

If the U.S. Supreme Court rules against subsidies in the King v. Burwell case, the five biggest insurers in the nation could see their stock prices, which have been steadily rising, take a nosedive, the Pittsburgh Post-Gazette reported.

In the last 12 months, UnitedHealth Group has seen its stock prices rise by 47 percent, Aetna's has increased by 45 percent, Cigna's stock has grown by 51 percent, Humana's has risen by 68 percent and Anthem's stock has increased by 49 percent.

In fact, insurer stock prices hit an all-time high in January and have been consistently outpacing the Standard & Poor's 500 Managed Health Care Index, FierceHealthPayer previously reported.

That's largely because the Affordable Care Act has helped consumers afford health coverage through federal subsidies as about 15 million people have enrolled in a health plan in the last two years. Larger membership has translated into higher revenues for insurers.

But all this financial growth could be thwarted if the U.S. Supreme Court rules that subsidies are illegal in the King v. Burwell case.

"At a minimum, [it] would create a lot of turmoil and uncertainty in the short run," Scott Harrington, healthcare professor at the University of Pennsylvania's Wharton School for business, told the Post-Gazette.

If the high court does invalidate subsidies, some insurers will be hit harder than others. For example, Anthem fully embraced health insurance exchanges, but UnitedHealth took a wait-and-see approach to the marketplaces.

Dan Dingus of Fragasso Financial Advisors believes that pending the King outcome, there might be a lot more consolidation in the healthcare industry. But he said predicting the ruling and "trying to handicap politics is probably the most difficult part of the" job.

To learn more:
- read the Pittsburgh Post-Gazette article