US hospital stocks index reaches highest level since 2015

Listen to this article

00:00
00:00

A barometer that tracks two large US hospital chains closed on Monday at its highest level since September 2015 amid enthusiasm that Obamacare will remain the law of the land for the foreseeable future.

The S&P 500 healthcare facilities index rallied by 4.6 per cent on Monday, which added to a 3.2 per cent rise on Friday. The gauge tracks acute-care focused HCA Holdings and behavioural-care geared Universal Health Services.

The sharp gains came after Donald Trump’s plans for repealing Obamacare evaporated in the House of Representatives on Friday, with Republican leadership unable to bridge differences of opinion between centrist and moderate members of the party.

“For healthcare providers and hospitals in particular, this is a positive development in the sense that the expected decrease in individuals with comprehensive health insurance has been avoided, along with the resultant drop in revenues,” analysts at S&P Global, the credit ratings group, said on Monday.

Obamacare has been seen as a boon to hospitals since it has knocked the US uninsured rate to historic lows, and through an expansion of the Medicaid programme for America’s poor and disabled, has helped providers curb write-downs on emergency care that must be provided regardless of individuals’ ability to pay.

The healthcare facilities index fell in the wake of Mr Trump’s election in November to the end of 2016 by 11.2 per cent a result of the businessman’s pledge to repeal Obamacare. But since the start of this year, it has surged by a fifth.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.