Shares in operators of US acute and behavioural hospitals posted their best day of 2017 after Republican pulled a plan to repeal large swaths of Obamacare.
The S&P 500 healthcare facilities index, which tracks the shares of HCA and Universal Health Services, rallied 3.2 per cent on Friday, the biggest rise since December 15.
Wall Street analysts have said that hospitals might come under pressure from parts of the American Health Care Act. In particular, they have focused on the expansion of Medicaid, the federal-state programme for America’s poor, which would have been curbed under the legislation that was pulled before an expected vote in the House of Representatives on Friday.
The non-partisan Congressional Budget Office projected the AHCA would cause 14m people to become uninsured next year, a number that would rise to 24m by 2026.
A lower insured population could lead to either reduced usage of medical services, or potentially higher write-offs for hospitals that must provide emergency care regardless of an individual’s ability to pay, analysts reckon.
Healthcare facilities stocks initially sold off after Mr Trump’s surprise election win in November, but have been on something of a roller coaster ride since. They surged at the start of this year with some analysts betting the selling was overdone, only to fall at the beginning of March, and then bounce back again (see chart above).