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Hospital stocks rise on court ruling

Hospital stocks rose sharply Thursday after the Supreme Court guaranteed them millions more paying customers by upholding the core of President Barack Obama's health care overhaul.

Some insurance company stocks, however, fell in choppy trading as investors fretted about the costs of rules included in the law.

"For the hospitals it means that they get payment and they get more potential customers," said JJ Kinahan, chief derivatives strategist for TD Ameritrade.

Insurers "have to be less selective of their clients, which is bad for them," he said.

The stock of Hospital Corp. of America, the largest private hospital chain in the United States, closed up 11 percent. Community Health Systems rose 8 percent, Health Management Associates 9 percent.

The ruling will add 32 million Americans to the rolls of the insured, vastly expanding the pool of health care consumers, said Jeffrey Loo, a stock analyst with S&P Capital IQ, a research group.

Under the current system, about one-fourth of the care provided by hospitals is never paid for, either because debts go bad or because the patient is uninsured, Loo said. He said the law will cut the portion of care that is not paid for in half.

Many insurance companies fell sharply after the ruling was announced. WellPoint plunged 8 percent, Aetna and Cigna nearly 3 percent.

Loo said some investors sold because they believe the insurance industry agreed to too many costly rules included in the law, such as covering people with existing medical conditions and ending pricing discrimination based on gender and age.

Stocks of the largest drug companies in the country closed mixed. Stocks of medical device makers fell about the same amount as the broader market.

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