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Repealing care act may lower profits; Companies weigh effect of high court ruling

Insurers and other health care companies are facing costly new restrictions and fees under the new law. The Republicans, the party most associated with big business, hate it. So if President Obama's health care overhaul is repealed by the Supreme Court this month, companies would rejoice, right?

Well, not all of them.

For many companies, overturning the law could mean less profit, not more.

The Supreme Court is expected to rule on the law, called the Affordable Care Act, by the end of the month. They could throw out all of the convoluted law, part of it or decide to keep it intact.

Opponents have focused on the so-called individual mandate. This requires virtually every U.S. resident to carry health insurance.

Here is how some companies will win or lose under four possible rulings by the high court.

*The court throws out the individual mandate but keeps the rest of law:

Hospitals could find themselves in the sick ward.

Hospitals have to foot at least some of the bill when uninsured patients show up for treatment. The law would help put an end to that by requiring most people to get coverage. Cut the requirement, and hospitals would have to continue paying out of pocket. Plus they would still have to swallow Medicare cuts in the law.

Though it's not clear investors are anticipating this, they have been selling stock of hospital chains lately. Since the high court started considering the case in late March, they have pushed down the stock of Universal Health Services, Tenet Healthcare and Kindred Healthcare by 6 percent or more.

In a partial repeal, the law would still require insurers to offer policies to people with prior medical conditions such as diabetes and cancer. That raises the scary prospect of only costly, sick people signing up for coverage.

*The court repeals the individual mandate and the new coverage rules:

Insurers would win.

They wouldn't have to worry about people signing up for coverage only after they got sick. They could just reject them. And the tax credit and Medicaid expansion would remain. Experts expect many uninsured would take advantage of those incentives to get coverage, and insurers would make more money.

"You have the market you have today, plus you have subsidies," says Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm in Washington D.C. "That's Disneyland, that's fabulous."

*The court repeals the entire law:

Insurers focused on Medicaid recipients could lose.

Of the estimated 30 million people gaining coverage under the law, more than half are expected to benefit from the expansion of eligibility requirements for Medicaid, the federal-state program for low income families. Take away the law, and you take away those new customers.

The stocks of two big insurers in this area -- Centene Corp. and Molina Healthcare -- are down more than 30 percent in the past three months. But Coffina says those companies have struggled with mispriced policies and other issues unrelated to the health care law.

*The court keeps the law:

In a sense, health care companies, and their investors, win.

Laszewski says insurers and drug makers know the problems and costs of the law and have already spent time and money complying with it, and so many don't want it thrown out. Plus, they fear that the vacuum that a repeal would create could be filled with a more restrictive, more costly overhaul in the future.

"No one really likes this law, but what's the alternative?" Laszewski says. "It's easier to fix a law in place with obvious flaws than starting over from scratch."

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