The Supreme Court is ready to determine if President Obama’s healthcare plan is within legal limits. The Patient Protection and Affordable Care Act aims to provide health insurance to more than 30 million previously uninsured Americans. The healthcare sector and exchange traded funds could see action in 2012 on the Supreme Court decision.
“This was the ultimate high-risk, high-reward gamble on the part of the White House,” Daniel Schnur, Sen. John McCain’s communications director in the 2000 presidential primary campaign, said on CBS News. “If the court rules to uphold it, that may make the law more popular among voters than it has been since its passage. On the other hand, overturning it would reinforce very strong feelings against it.”
The Obama Administration stands to gain more re-election prospects if the law is upheld by court. The current administration has confidence the impact will be significant and in their favor.
The idea that the individual mandate will require Americans to obtain health insurance by 2014 or pay a penalty is up for debate. Is it constitutional, or not? The Supreme Court will decide this, then the court of public opinion will have its say. This will come down to those who pay out of pocket for their health insurance, and those who do not.
“It’s worth noting that the healthcare sector has hit somewhat of a lull in recent years, as some key blockbuster drugs have lost exclusivity and a blitz of competition ensued from generic drug firms. Currently, we believe there are two main themes for investors to consider before investing in healthcare: recently approved health care reform and the mega merger activity among the pharmaceuticals,” says Morningstar analyst Robert Goldsborough. [Healthcare ETFs Live Up to Defensive Reputation]
SPDR Health Care Select Sector Fund (NYSEArca: XLV) has $4.4 billion in assets and has gained almost 12% over the past 12 months. The cyclical and defensive nature of this sector has been paying off. Vanguard Health Care Sector ETF (NYSEArca: VHT) has $680 million in assets and offers exposure to big phama companies. [ETF Chart of the Day: Healthcare]
Vanguard Health Care Sector ETF
Tisha Guerrero contributed to this article.