As the presidential elections are only months away, a big issue on the minds of U.S. citizens is the state of the health care industry, the quality of the care we receive, and how any decisions made will affect exchange traded funds (ETFs).

The United States spends heavily on health care, especially in contrast to other industrialized countries, but is it actually worth the expense?

A recent report by the Commonwealth Fund highlighted the contrast between the health care system in America compared to those in other nations of industry. The results indicated that the United States spends twice as much as other countries, while the quality is certainly questionable. Some 75 million people are thought to be without sufficient health care or any at all. We’re in last place among those countries in preventing deaths through effective medical care.

Reed Abelson for The New York Times reports that while the presidential candidates both emphasize the need for a shift within our health care system, business leaders and professionals also express a dire need for a huge change.

Much of our system is flawed because of inefficiencies such as administrative costs of medical insurance systems. Privatizing insurance would play a significant role in this.

Pharmaceuticals also took a hit yesterday after Schering-Plough and Merck’s cholesterol drug Vytorin wasn’t shown to reduce the risk of major heart valve problems, according to a study. It was no better than a placebo, reports the Associated Press. The Pharmaceutical HOLDRs (PPH) were lower on the news. Year-to-date, the fund is down 11.2%. Schering Plough (SGP) is 3.9% and Merck (MRK) is 11.8%.

Meanwhile, ETFs that are in need of healthy changes:

• Vanguard Health Care (VHT), down 9.1% year-to-date
• Health Care Select Sector SPDR (XLV), down 9.4% year-to-date
• iShares Dow Jones US Health Care Sector Index Fund (IYH), down 8.6% year-to-date

Tags: IYH, Sector ETFs, VHT, XLV