View from the Observation Deck

1. All eyes were on the Supreme Court this week as it heard three days worth of arguments regarding the constitutionality of the 2010 Patient Protection and Affordable Care Act ("Obamacare").
2. Twenty-six states are suing the federal government, primarily on the grounds that it does not have the authority to force individuals to purchase health insurance. A ruling is not expected until summer.
3. During the 2008 election campaign, then Senator Barack Obama advocated for new legislation that would permit the federal government to compete with managed care providers.
4. The goal was to provide health coverage to the bulk of the 40-plus million Americans who were uninsured, as well as reduce costs.
5. Talk of the U.S. moving towards socialized medicine drove investors away from managed care companies.
6. In 2008, the S&P 500 Managed Care Index posted a total return of -55.0%, far worse than the 22.8% decline for the broader S&P 500 Health Care Index and 37.0% plunge in the S&P 500.
7. As the chart shows, managed care providers staged a sharp recovery once the fears of socializing the health care system in the U.S. abated.
8. The 2012 estimated earnings growth rate for the S&P 500 Health Care Index is currently 11.6%, compared to 8.8% for the S&P 500, according to Standard & Poor's.