HMO stocks are strong today after three days of hearings on the constitutionality of President Obama's healthcare plan in the Supreme Court.
The debate centers around severability: specifically, will the Justices sever the individual mandate that requires everyone to buy insurance from the rest of the legislation?
This would be the worst case scenario: insurers would have 30 million less people on the rolls, and still be required to implement the more onerous provisions like the requirement to provide insurance for anyone with a pre-existing condition.
But many now believe that severability is less likely, that the law will be voted up in its entirety — which would enroll millions of new people on the HMO docks — or thrown out in its entirety, essentially throwing out the good and bad together.
The argument against severability is a simple one: the Justices are unlikely to go through 2,700 pages of law and decide which parts should be kept and which parts should not; it's simply too complicated. Justice Scalia summarized the dilemma when he said, "Can you take out the heart of the Act and leave everything else in place?"
Don't get too excited — this is really too close to call, so HMOs are going to be in limbo until June when a decision is expected.
HMO Components: Highest Since: (based on last sale)
UnitedHealth Dec 31, 2007 (> 4 year high)
Aetna March 5, 2008 (4 year high)
Coventry July 28, 2011 (8 month high)
Cigna July 29, 2011 (8 month high)
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