Market Overview

Sterne Agee Sees Opportunities With Latest Obamacare Court Challenge


Sterne Agee analyst Brian Wright issued comments Monday on the upcoming Supreme Court review involving the Affordable Care Act, often referred to as Obamacare.

"On Friday afternoon, the U.S. Supreme Court (SCOTUS) announced that it will hear the King vs. Burwell case that questions the legality of health insurance subsidies on federally facilitated public exchanges.

"While the issue creates near-term uncertainty, we believe there are potential solutions even if SCOTUS finds that subsidies are only allowed in state-run exchanges," according to Wright.

Wright also believed that "any associated weakness creates buying opportunities in [Health Net, Inc. (NYSE: HNT)] and the Medicaid plans [Centene Corp (NYSE: CNC), Molina Healthcare, Inc. (NYSE: MOH) and WellCare Health Plans, Inc. (NYSE: WCG)] given lack of material exposure to this issue."

"Our reading of ACA allows the states to subcontract out exchange functionality and The Centers for Medicare and Medicaid Services (CMS) could be the subcontractor, though law specifics may require CMS to create state subsidiaries (subject to state law)."

The analyst note concluded that “ACA included an authority to contract section that allowed states to enter into agreements with third parties to carry out one or more responsibilities of the Exchange. Of the three requirements for an eligible contracting entity, CMS easily could be seen as fulfilling two. The only requirement that would be challenging is that it must be a person incorporated under, and subject to the laws of, one or more states.”

Latest Ratings for HNT

Nov 2015MaintainsNeutral
Aug 2015MaintainsMarket Perform
Aug 2015MaintainsUnderweight

View More Analyst Ratings for HNT
View the Latest Analyst Ratings

Posted-In: Brian Wright Sterne AgeeAnalyst Color News Legal Analyst Ratings


Related Articles (CNC + HNT)

View Comments and Join the Discussion!

Latest Ratings

ECORJMP SecuritiesDowngrades
CDLXJP MorganDowngrades58.0
BCYCRoth CapitalInitiates Coverage On17.0
ARVNRoth CapitalInitiates Coverage On35.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Brean Capital Positive On Activision Blizzard, Sees Return To Growth

Arrowhead Offers Data on ARC-520, ARC-AAT at AASLD The Liver Meeting