Investing.com -- A plethora of stocks in the health care sector rose sharply on Wednesday after Supreme Court justice Anthony Kennedy questioned the constitutionality of an argument brought by plaintiffs who are attempting to strike down the Affordable Care Act.
The Supreme Court listened to oral arguments on Wednesday in King v. Burwell, a case that is challenging the tax credits in President Barack Obama's signature health care law. The key issue in the case focuses on whether the Federal Government can continue to subsidize insurance costs in more than 35 states that have not set up their own insurance exchanges.
Michael Carvin, an attorney for the plaintiffs, argued that a provision of the law suggests that subsidies are only available to people living in areas with insurance exchanges that had already been "established by the state."
If the plaintiffs are successful in winning the case, up to seven million people in those states combined could lose their insurance coverage unless the states set up their own insurance marketplaces.
"There is a serious constitutional problem here if we adopt your position," Kennedy told Carvin.
On the Dow Jones Industrial Average, UnitedHealth Group Incorporated (NYSE:UNH) closed the day as its top performer after gaining 0.91% or 1.03 to 113.89. Anthem Inc (NYSE:ANTM), the nation's largest for-profit managed health care company, also rose 0.38% or 0.56 to close at 146.55. Aetna Inc (NYSE:AET), meanwhile, also moved higher, gaining 1.96% or 1.96 to 101.75.
Hospital management companies also soared higher following Justice Kennedy's comments. HCA Holdings Inc (NYSE:HCA), the largest for-profit operator of health care facilities in the world, gained 5.85% or 4.14 points to 74.93. Tenet Healthcare Corporation (NYSE:THC), which owns 80 hospitals in 14 states, posted similar gains, as it closed 6.23% higher at 49.99. Universal Health Services Inc (NYSE:UHS), a Pennsylvania-based hospital management company, gained 2.68% or 3.02 points to close at 115.75.
The court is expected to reach a decision by mid-June.