TMFHelical (99.03)

Healthcare Hearings Today

March 26, 2012 – Comments (3) | RELATED TICKERS: WLP , UNH , AET

Today is the start of the arguments before the Supreme Court regarding 'Obama Care', i.e. the Patient Protection and Affordable Care Act (PPACA).  As someone running a healthcare sector investment portfolio, there is little more important than considering the outcome here.  The key consideration that will be heard is the requirement for an individual mandate, but before this can be heard, the court needs to decide whether they are yet allowed to hear on it (yeah, law is like that sometimes).  NPR summarized this nicely today.

4 Questions that could Make or Break the Health Care Law

In the Helical protfolio, the holding most teetering on the eventual outcome here is insurer Wellpoint, though most all have an interest.  Without the expected influx of insurees, some of the other considerations of PPACA could get really burdensome.  These include the inability to deny pre-existing conditions and the removal of the insurance cap.  Without the mandate, many could simply wait until they find themselves ill to obtain coverage.  Should the law stick, the larger insurers are almost certainly best positioned to benefit from the creation of health insurance exchanges that each state will need to set up.  Currently Wellpoint is ~10% of the Helical Port, perhaps a bit high for such a binary risk consideration, but a risk with which I'm currnetly comofrotable.

While very politicized right now, the judges could well take a more non-partisan approach to the mandate, assuming they decide they can consider it before it takes effect.  After all, the idea for an individual mandate was originally a Republican one.

For investors, any event of a binary nature, as this could be, is likely to provide both opportunity and volatility.

TMFHelical

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