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Hospital stocks buck market drop after Obamacare repeal fails

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Joe Raedle | Getty Images

Hospital stocks rose Monday following the withdrawal of the GOP's bill that would have replaced significant parts of Obamacare.

While the broader stock market traded lower on concerns that the Trump administration faces more challenges in achieving tax reform, hospital and Medicaid-related stocks moved higher.

Shares of mental health treatment facilities' operator Acadia Healthcare closed Monday up around 5 percent. Hospital owner Tenet Healthcare gained more than 1 percent, and Community Health Systems also closed up a little more than 1 percent, shedding some bigger gains made earlier in the day.

HCA Holdings, one of the nation's largest hospital operators, reached a new multiyear high on Monday morning and came about 5 percent from all-time high hit in 2015.

The hospital industry had opposed the Republican proposal because it was anticipated to increase the number of Americans without health insurance, which could have raised hospital losses.

Medicaid-related stocks are also trading up to start the week, the only major insurance stocks that have achieved a positive return in the market this month.

California-based Molina Healthcare ended Monday up nearly 3 percent, and Missouri-based Centene Corporation closed the day up a little more than 2 percent.

Obamacare has enabled 20 million previously uninsured people to obtain coverage through Medicaid — a government health insurance program for the poor — many of whom could have lost insurance through the GOP's proposal, according to a report from the Congressional Budget Office.

"I think we have to let Obamacare go its way a little while," President Donald Trump said in a press conference Friday afternoon, after Speaker Paul Ryan made the trip to the White House to tell the president there weren't enough votes to get the replacement bill passed. Trump went on to say that tax reform would be the next priority for Congress.

The health-care sector was one of four in the S&P 500 to close in green territory on Monday, which was also helped by slight gains in large-cap stocks Johnson & Johnson and Pfizer.

S&P 500 health-care sector 1-month performance 

Source: FactSet

— CNBC's Bertha Coombs and Evelyn Cheng contributed to this report.