Healthcare stocks drop in US markets after Obamacare ruled unconstitutional

US healthcare stocks are struggling after a recent court ruling that puts Obamacare in jeopardy. A Texas judge recently ruled that the Affordable Care Act is unconstitutional, putting the health of patients and shares in uncertainty.

How Obamacare affects healthcare stocks

The Affordable Care Act, or Obamacare as it’s commonly known, was signed by former US President, Barack Obama, in 2010 to offer health insurance to more US residents. The program has since insured over 45 million people, but many Republicans oppose the law. They oppose the fact that the legislation has a mandate that US citizens that can afford to must purchase insurance or pay a penalty. Many Republican attorneys general filed a lawsuit alleging that the policy is unconstitutional. A Texas court sided with the attorneys and ruled in their favor that the mandate was unlawful.

Though the Affordable Care Act is a political controversy, health provider shares have been affected as well. Because Obamacare added millions of customers to private insurance companies, stocks in those corporations rose over the years the law was in effect. Since the recent ruling against the policy, those shares have gone down because of uncertainty over whether the bill will be completely repealed.

How ruling will affect healthcare stocks in the future

Many healthcare experts are optimistic that the Affordable Care Act will survive this latest challenge. Matt Borsch, healthcare analyst at BMO Capital, says this is a good time to purchase healthcare stocks since he expects the ruling will be overturned.

‘As we expect that this matter will be resolved within a 12-month window, we have elected to maintain our target prices,’ noted Borsch.

Investors and US residents will be watching to see how this latest chapter of the Affordable Care Act will play out in 2019.