Health Law: Court Comments Cloud Stocks' Future
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whelan at The Wall Street Journal in New York. Comments by a federal appeals court this week regarding the Affordable Care Act have put the spotlight on health care stocks, and not for a good reason. We'll check in with the Journal's Heard on the Street team in a moment to explain. First, some money in market news you should know. The record economic expansion has showered benefits on an unexpected sector of the working population, low-skilled workers. That's the topic of Journal chief economic commentator Greg Ips' latest Capital Account column. He writes that just 10 years ago, low-skilled workers looked as if they were suffering through a permanent setback. But as the labor market has tightened significantly and employers struggle to find workers, they relax their education and experience requirements to fill slots.
But low-skilled workers' fortunes will likely reverse when the expansion ends, and among other things, college graduates may take less skilled jobs, displacing less educated workers. And if you're listening to us in the state of Kentucky, you're probably doing not much else.
What recent federal appeals court comments are raising doubts about the Affordable Care Act?
The Centers for Disease Control reports that Kentucky has the highest number of adults who get no exercise. They put the number at 34%. Mississippi, Arkansas, Oklahoma, and Texas round out the top five. In Washington state, only about 19% of adults engage in no physical leisure activity. Colorado, California, and Alaska are close behind Washington. The CDC also measured obesity in each state, and West Virginia tops that dubious list of with a 38% obesity rate. Mississippi and Oklahoma are also on that list, followed by Iowa and Alabama. In terms of excess, Wade, Colorado takes the prize with only about 22% classified as obese.
How did the hosts summarize broader market and economic headlines before the interview?
Washington, D.C., Hawaii, California, and Utah are close behind.
A federal appeals court has brought the future of the Affordable Care Act into question, and that's turned attention to health care stocks, which may face a cloudy future as a result. And Herd on the Street columnist Charlie Grant is here with some details. So, Charlie, the appeals court did not strike down the Health Care Act, but it raised questions about the penalty assessed on people if they don't have insurance.
That's right. Tuesday was just an appeals court hearing down in New Orleans. But according to our colleague, Brett Kendall, who was in the room, the tone from the judges asking questions was decidedly skeptical, which would imply that the Affordable Care Act might indeed be in jeopardy here.
What did reporters observe about the tone of judges at the New Orleans appeals hearing?
And we've been down this road before. Healthcare stocks didn't move much when the appeals court voiced their skepticism over the law. But you say that investors should pay very close attention to the stocks going forward.
That's right. The health stocks are having a good day today partially because every stock is having a good day. Rate cut mania. So market is hitting a new record. But that helps, of course, for healthcare stocks. But at the same time, there's this lingering threat that the entire regulatory framework that has been so good to this industry could be rewritten.
But if the health care law were overturned or rewritten, Morgan Stanley says that could drop the share of Americans with health insurance from 87 down to 74 percent. And you point out in your column that hospitals would take a hit as well.
That's right. I mean, insurers. Would obviously take a hit with fewer patients on the rolls, but that has a ripple effect through the entire sector because you need insurance to consume most services. So that could mean fewer, less demand for hospital beds, less demand for expensive medication, less demand for knee replacement surgery. It's hard to say where this goes.
And in your column, you mentioned some midsize insurers that could be affected particularly bad.
Yeah. Centene, Molina Health, WellCare, these companies all have expanded greatly since the Affordable Care Act became law. Heavy emphasis on Medicaid and the Obamacare private insurance exchanges, individual plans, as they're known.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–1:08
2
What recent federal appeals court comments are raising doubts about the Affordable Care Act?
1:08–1:52
3
How did the hosts summarize broader market and economic headlines before the interview?
1:52–2:45
4
What did reporters observe about the tone of judges at the New Orleans appeals hearing?
2:45–4:14
5
How could overturning or rewriting the ACA affect insurance coverage and hospitals?
4:14–5:04
6
Which midsize health insurers could be most exposed if Obamacare changes, and why?
5:04–5:47
7
What should investors expect in the health-care sector amid legal and political uncertainty?
5:47–6:01
Speakers
2 identifiedMore from WSJ Your Money Briefing
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