The only group more excited by the clumsy death of Republican efforts to repeal and replace Obamacare than the millions set to keep their health insurance are the hospitals that treat them.
Hospital investors are thrilled for good reason; the GOP plan would have increased the ranks of uninsured Americans, gouged Medicaid and dropped regulations forcing insurance to cover hospitalization. That would have hurt sales and profits.
Shares of a Bloomberg Intelligence index of North American hospitals jumped 5.4 per cent on Friday as the GOP bill died and gained another 4 per cent Monday. But the relief rally may be short-lived.
The GOP plan to replace the Affordable Care Act failed for a number of reasons. It was a rush job almost universally derided as bad policy. But fundamentally, it failed because of the unbridgeable GOP divide between conservative hardliners who wanted a more thorough ACA repeal and moderates for whom this bill was too harsh. That divide remains.
But President Donald Trump is still in the health policy driver's seat, albeit in a smaller truck, and he's mapping out an uncertain future. He has warned the ACA is doomed to collapse, and there are several ways he could sabotage the law, from loosely enforcing its individual insurance mandate to fighting subsidies that help insurers.
The ACA might not collapse through neglect alone, but a Trump administration actively undermining it could make things messy. That seems a more likely outcome than any dream that Mr. Trump and lawmakers will forge a bipartisan consensus on fixing the ACA's shortcomings.
That could create a feedback loop of uncertainty between insurers who don't know whether they will please or infuriate the administration by staying in the ACA's exchanges and hospitals who don't know if the population they serve will be insured.
Tenet Healthcare Corp. and Community Health Systems Inc. -- two struggling hospital groups which each have have debt that exceeds their market cap by more than $13 billion -- have seen their stocks jump by 19 and 18 per cent, respectively, over a six-day period, while their bonds rallied. Considering the uncertainty that remains, that looks like over-exuberance.
Add in the broader market retrenchment -- as investors realize the bullish Trump Trade was basically overwrought fan fiction -- and it's hard to see health care's relief rally lasting much longer.
Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.