As November approaches, health care exchange traded fund investors will be waiting to see if President Obama wins and goes ahead with the health care reform or if Mitt Romney comes on top and tries to repeal the Affordable Care Act.
After the Supreme Court upheld President Obama’s health care reform, over 30 million Americans will be insured.
Needless to say, the boost in the number of potential customers will be a boon for the health care sector over the long-term. However, the short-term effects could be pressured by higher costs as the sector implements the changes. [ETFs and the Presidential Election]
“Morningstar’s equity analysts believe that health-care reform will weigh on the health-care industry’s earnings per share by as much as 5% a year during the first few years of reform, followed by earnings gains of about 2% a year later in the decade,” according to Morningstar analyst Robert Goldsborough. “This will occur, our equity analysts feel, because by 2014, volumes created by increases in the number of patients insured will begin mitigating cost pressures.”
On the other hand, if Romney gets his win, he will actively repeal the law and reset the sector. However, the changes to implement the health care reform are already a sunk cost.