Huh: Hospital Stocks Fall in Wake of Romney Debate Success

Posted: Oct 04, 2012 2:14 PM

Those who favor a market-based approach to predicting the presidential election, take note: while Obama still has a two-thirds advantage on Intrade, the stock market showed a shift that indicates the market sees life in Romney's campaign yet. Hospital stock fell after his strong debate performance, a statistic that is tied to politics thanks to the Affordable Care Act. They stand to gain quite a bit financially from the law, in that the cost of treated uninsured patients will no longer fall directly to them. The day the Supreme Court upheld the ACA, the entire market fell about one per cent, but hospital stocks spiked, up to 8.5%.

So the fact that hospital shares fell last night signals fears that the Act will be repealed -- which, of course, only happens if Mitt Romney wins in November:

Shares of U.S. hospital operators fell after Republican nominee Mitt Romney's strong showing in Wednesday's U.S. presidential debate raised doubts about the future of President Obama's healthcare reform.

Hospital operators Tenet Healthcare Corp, HCA Holdings Inc, Healthsouth Corp and HCP Inc were all down between 1 percent and 3 percent Thursday on the New York Stock Exchange.

The Affordable Care Act or Obamacare, as it is popularly known, has set forth a mandate that will force millions of Americans to buy health insurance by 2014. This will free hospitals from bearing the costs of treating uninsured patients.

Romney's perceived win in the debate accounted for the negative outlook on hospital stocks on Thursday, Wells Fargo Securities analyst Gary Lieberman said.

"Hospitals had been rallying on the likelihood of Obama's healthcare reform getting implemented as it looked like he had pulled ahead in polls," Lieberman said.

But Romney's Wednesday performance showed the race was tightening, increasing the risk to hospital stocks, RBC Capital Markets analyst Frank Morgan said.

Of course, the race is far from over -- we're just about at the month mark, and a lot can happen -- but it's an indicator that Obama hardly has the race locked up, and the market knows it.