(Bloomberg) -- Hospitals led a rally among health-care companies as the U.S. Supreme Court upheld a key piece of President Barack Obama’s Affordable Care Act, lifting the main threat hanging over the industry’s prospects.

Read: Supreme Court upholds subsidies

HCA Holdings Inc., Tenet Healthcare Corp. and Community Health Systems Inc. all gained at least 8 percent after the ruling.

The court ruled 6-3 that tax subsidies can be provided nationwide to help people afford health insurance. Obamacare has provided millions of paying customers for hospitals and health insurers, in part through the subsidies that were upheld today. The new clients have helped fuel a multiyear rally for health care stocks, and more consumers are expected to emerge in the coming years.

“There are still a lot more people who haven’t gotten insurance,” Steve Halper, an analyst at FBR & Co., said before the court’s ruling. “The states will expand their Medicaid programs, and more people will comply with the mandate.”

Today’s ruling keeps subsidies flowing for about 6.4 million people who are getting subsidies in the 34 states that rely on the federal insurance exchange. It doesn’t affect those buying policies in states like California and New York that run their own marketplaces.

Community Health rallied 9.6 percent to $60.53 at 10:20 a.m. in New York. Tenet jumped 9.3 percent, while HCA, the largest U.S. for-profit hospital chain, gained 8.2 percent.

Stock gains at insurers were smaller, in part because subsidized customers make up a small proportion of the total business at the biggest firms. Still, the companies will benefit as more people purchase coverage in the future. Health insurer stocks have also rallied sharply in recent days amid speculation about mergers in the industry.

UnitedHealth Group Inc., the biggest U.S. health insurer, gained 1.9 percent to $121.41. Humana Inc. rose 2.6 percent and Aetna Inc. added less than 1 percent.

More than 10 million people have purchased insurance on the federal and state marketplaces set up by the health-care overhaul, and about 85 percent have received government funds to help them afford the coverage, according to the Centers for Medicare & Medicaid Services. The Congressional Budget Office estimates that more than 20 million people will sign up for coverage on the insurance exchanges in 2016.

For-profit hospital chains had about 2 percent to 5 percent of their earnings riding on the case, according to Bloomberg Intelligence.

Instant Insights /

Hospitals rally as Supreme Court upholds PPACA subsidies

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