Health insurance stocks slid on Tuesday after the Justice Department said it stood with a Texas district court’s December ruling that the Affordable Care Act is unconstitutional, essentially agreeing that the entire law should be struck down. Shares of companies with heavier exposure to Medicaid were in the lead, with Molina Healthcare, Inc. MOH, -6.32% shares falling 6.6%, Centene Corporation CNC, -2.40% shares falling 2% and WellCare Health Plans Inc. WCG, -2.58% shares slipping 1.8%. Shares of more diversified, large-cap companies like UnitedHealth Group Incorporated UNH, -0.40% Cigna Corporation CI, -1.02% Humana Inc. HUM, -1.49% and Anthem Inc. ANTM, -1.47% slipped as well. “The space could see continued weakness on the back of the DOJ brief,” Jefferies health-care trader Jared Holz told MarketWatch in an email. He said he thinks an actual law change would be unlikely, since that would require support from both the House and the Senate. “The greater significance here near-term could be additional headline risk adding to an already tenuous ground for insurers,” he said. The ruling was a departure for the Justice Department, which had previously sought to cut only protections for pre-existing conditions.
Have breaking news sent to your inbox. Subscribe to MarketWatch’s free Bulletin emails. Sign up here.