ACA chaos leaves health investors unfazed

It was chaos in Washington, D.C., in terms of a national health care policy as the Senate unsuccessfully has struggled to pass anything related to repealing, replacing or reworking the Affordable Care Act.

But you wouldn't know it from looking at the stock market.

Health care companies in the Standard & Poor's 500 Index have rallied 16 percent this year, beating the overall market's 11 percent gain. Insurers, the companies tied most closely to the ACA, are up even more, at 23 percent.

Wall Street's apparent indifference to the possibility that Republicans would succeed in repealing the ACA shows how the for-profit health industry largely has separated itself from the law's fate.

While the ACA brought insurance to 20 million people, drugmakers said it hasn't boosted their profits. Publicly traded insurers largely have quit the health law's markets after losing money.

And hospitals have bigger problems, tied to structural shifts in how people are getting care.

'It's really steady as she goes,” said Les Funtleyder, a health investor at E Squared Capital Management. 'Most of the stocks are basically calling the Congress's bluff, in that really nothing material is going to happen.”

Second-quarter results from health insurers Anthem Inc. and Centene Corp., both big players in Obamacare, exceeded Wall Street's expectations this week. Anthem said it'll quit Obamacare markets if it can't make them work, while Centene confidently is planning to expand in parts of nine states.

A specialist in administering Medicaid plans for the poor, Centene plunged after Trump's election in November. This year, it's soared almost 50 percent, putting it among the best performing health stocks in the S&P 500.

Other big, publicly traded health insurers - Aetna Inc., Humana Inc. and UnitedHealth Group Inc. - mostly have quit the ACA.

Molina Healthcare Inc. ousted its top executives earlier this year after poor ACA results, and its stock has surged since on hopes for a turnaround or sale of the company. Molina is scheduled to report quarterly results next week.

Big drug and biotechnology companies, up about 13 percent this year as a group, say they're not much exposed to Obamacare. Trump's early rhetoric that he'd force drug companies to lower prices has faded. Instead of relying on government interference in price setting, the administration has backed plans by the Food and Drug Administration commissioner to boost competition.