The United States is going through the violent paroxysms of birthing a new health care reform bill that would alter our health care system as we know it. Some sectors and exchange traded funds (ETFs) felt the spasms, and they weren’t too pleased.
Heading off any attempts of a Republican filibuster, the Senate voted on party lines for a significant overhaul of the nation’s health care, with the votes tallying 60 to 40, report David M. Herszenhorn and Robert Pear for The New York Times. Democrats hailed the occasion as the start to reshaping the health system while Republicans staunchly believe the bill was fatally flawed. [What health care reform could mean for ETFs.]
If the health care law is ratified, medical devices and pharmaceutical ETFs could lose their recent gains, remarks Don Dion for TheStreet. Health care providers and biotech companies, on the other hand, might have already seen the worst of it. [How to play Obama’s new policies.]
- iShares Dow Jones U.S. Medical Devices (NYSEArca: IHI): up 37.3% year-to-date
- iShares Dow Jones U.S. Pharmaceuticals (NYSEArca: IHE): up 29.8% year-to-date
- iShares Dow Jones U.S. Healthcare Provider (NYSEArca: IHF): up 38.0% year-to-date
- iShares Nasdaq Biotechnology (NASDAQ: IBB): up 13.1% year-to-date
The transformation and passage of the health care reform bill could send health care funds in varying directions. The “public option,” or government insurance alternative, has been taken out, and the existing employer-based health-insurance system hasn’t been tampered with.
The new bill, however, is expected to hurt Big Pharma’s profits. Biotech drugs usually focus on a small group of patients, and the specialization will help minimize the leverage pharmaceuticals have over drug firms. Medical device manufacturers will likely take a hit after cuts to medicare and new taxes take their toll.
Once the bill finishes its rounds in the Senate, the bill will have to be reconciled with the bill adopted by the House, and there are significant disparities between the two. For instance, the House includes a public option that was dropped by the Senate.
For more information on the health care sector, visit our health care category.
Max Chen contributed to this article.