“The numbers are staggering,” Jeff Loo, health care sector equity analyst at S&P Capital IQ, said in the article. “If the subsidies go away one would imagine the bulk of these people will no longer be purchasing insurance, which will have some kind of adverse effect on the health care sector.”
If one believes the Supreme Court will rule in favor of the plaintains and potentially trigger a sell-off in the healthcare industry, investors can utilize a few inverse or bearish ETF options to hedge their positions. For instance, the recently launched Direxion Daily S&P Biotech Bear Shares (NYSEArca: LABD) takes the -3x or -300% daily performance of the biotech sector, the ProShares Ultrashort Nasdaq Biotechnology (NasdaqGM: BIS) tracks the -2x or -200% daily performance of the biotech space and ProShares UltraShort Health Care (NYSEArca: RXD) follows the -2x or -200% daily performance of the broader healthcare sector.
Nevertheless, many money managers remain bullish on the healthcare sector over the long-term as an aging demographics will help support the industry and a short-term fix may be passed through Congress to patch up any leaks in Obamacare.
“As far as the fundamental demand for health care services, we are going from 15% of the U.S. population over age 65 to more than 20% in the next five years,” Hank Mulvihill, principal at Mulvihill Asset Management, said in the article. “This is an unprecedented surge in the population cohort which most rapidly increases consumption of health care services.”
For more information on the healthcare sector, visit our healthcare category.
Max Chen contributed to this article