The S&P 500 Managed CareIndex fell 2.3 percent to the lowest since Oct. 29, led by Centene,WellCare, Anthem and Cigna. Molina plunged as much as 13.5 percent,the most since February 2017. (Photo: Bloomberg)

(Bloomberg) –Health-care stocks were among the worst performersin the S&P 500 selloff Monday as hospitals and insurance stockssink on a judge's ruling Friday that Obamacare isunconstitutional.

Related: Dems vow action after TX judge rules ACAunconstitutional

A judge sided with Texas late Friday in a lawsuit alleging thatCongress's decision in 2017 to kill a related tax penaltyessentially voided the entire Affordable Care Act.

While many analysts expect the ruling to be reversed by highercourts, the news adds to volatility in a sector that had barelyrecovered from political overhangs this year and yet remains thetop performing sector in the S&P 500.

Related: CMS has 'contingency' plans if ACAoverthrown

U.S. hospitals, which are most at risk from the latest ruling,fell as much as 4.4 percent to the lowest since March 1.

The drop in the Bloomberg Intelligence Hospitals Index is led byCommunity Health Systems, Tenet Healthcare, Quorum Health and HCAHealthcare.

Tenet was downgraded by Baird after the ruling, while analystMatthew Gillmor recommended buying HCA and Universal Health on theweakness.

Centene, Molina hit hard

The S&P 500 Managed Care Index fell 2.3 percent to thelowest since Oct. 29, led by Centene, WellCare, Anthem and Cigna.Molina plunged as much as 13.5 percent, the most since February2017.

“Texas just really messed with us,” Jefferies health-strategistJared Holz said in a note. “We now enter 2019 with a (new)overhang.”

Health-care investors already were licking their wounds fromJohnson & Johnson's $45 billion plunge on Friday related to aReuters report about asbestos in baby powder.

Centene and Molina are bearing the brunt of the selloff inmanaged care given their exposure to Medicaid and Obamacaremarkets, also known as the public exchanges.

Both insurers have a total ACA exposure of more than 40 percentof EPS, followed by WellCare Health at 10 percent, JPMorgan analystGary Taylor reminded investors in an email late Friday.

Unpaid bills

Across publicly traded hospitals, earnings exposure to thehealth-care law is as much as 10 percent, Leerink Partners analystAna Gupte wrote in a note. She cautioned that facilities could seea drop in patient volumes and a rise in unpaid bills if people losetheir health insurance.

The Monday selloff threatens to diminish or erase payers' andproviders' gains this year, with S&P 500 Managed Care Indexstill up 14 percent and the Bloomberg Intelligence Hospitals Indexup 1.5 percent.

Other subsectors, including medtech, pharma and biotech, arealso feeling the aftershock. “This could all be an excellent buyingopportunity depending on magnitude of moves and the next stepsaround another court entering a stay,” Holz wrote.

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