Health care-related stocks were under pressure Wednesday, one day after the Obama administration delayed part of last year's health care reform law until 2015.
Investors had been betting that hospital operators and insurance companies would benefit from an increase in the number of insured workers under the law, widely known as Obamacare.
Shares of Tenet Healthcare (THC), which operates hospitals and outpatient centers in 11 states, fell 4% Wednesday.
Investors also punished shares of HCA Holdings (HCA), LifePointHospitals (LPNT), Community Health Systems (CYH) and Health Management Associates. (HMA)
The iShares Dow Jones U.S. Health Care Provider Index Fund (IHF) , which includes drug stocks like Johnson & Johnson (JNJ) and Pfizer (PFE), was down1%.
Shares of major health insurance companies also pulled back. UnitedHealth (UNH), Humana (HUM)and Aetna (AET) were all down about 0.5%.
The Treasury Department said Tuesday it will delay a provision in the law that requires businesses to provide their workers with health insurance or face fines.
The decision came after businesses complained about the complexity of the law's reporting requirement, which applies to firms with more than 50 full-time employees that don't already provide coverage.
Critics say the law will cause small businesses to cut back on full-time workers and hire more part-timers to avoid penalties. But the delay is not expected to have a major impact on profits for big insurance companies.
Related: Delay in Obamacare - what you need to know
"I don't think this is a game changer for the industry," said Les Funtleyder, a health care strategist at Poliwogg, a New York-based investment firm.
Funtleyder said the provision was seen as a "marginal positive" for insurance companies, although the decision to delay raises questions about what other aspects of the law may be changed.
"There's probably some uncertainty discount being built into the stocks," he said.
Funtleyder said industry analysts are more concerned about the implementation of federal health insurance exchanges, which are supposed to take effect Oct. 1.
While a few state-run exchanges are moving forward, he said federally managed exchanges in about 30 states appear to be behind schedule.
"A lot of people are wondering if that will be delayed," said Funtleyder.
