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

Supreme Court
  • Healthcare stocks tanked on Monday after the death of Supreme Court 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. Trump and Senate Republicans are rushing to fill Ginsburg’s seat; a strengthened conservative majority would make the court far more likely to reverse the law.
  • Sector giants including Johnson & Johnson, UnitedHealth Group, and Amgen tumbled through the session.
  • Several analysts lowered their ratings on healthcare stocks, saying Ginsburg’s death clouded revenue estimates.
  • Visit the Business Insider homepage for more stories.

Healthcare stocks tumbled on Monday after the death of Supreme Court Justice Ruth Bader Ginsburg sparked concerns that the court would dismantle Obamacare and roil the health-insurance industry.

Senate Republicans and the Trump administration are setting out to fill Ginsburg’s court seat ahead of the US presidential election in November. A strong conservative majority on the nation’s highest court would make it more likely to gut the Affordable Care Act.

The Trump administration’s challenge to the law is set to reach the Supreme Court on November 10, leaving time for the White House and Senate Majority Leader Mitch McConnell to push a nominee through the confirmation process.

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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.

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

A slew of analyst downgrades added to the sector’s decline. JPMorgan lowered its 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.

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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 exchange-traded fund, which tracks the S&P 500’s healthcare sector, traded at $102.32 as of 11:55 a.m. ET, up 0.5% year-to-date and down 2.7% from Friday’s close.

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