The healthcare sector and related exchange traded funds are deteriorating as a Donald Trump presidency leaves the future of the Affordable Care Act, or so-called Obamacare, in question.
The Health Care Select Sector SPDR (NYSEArca: XLV) fell 1.6% Tuesday after dipping 0.5% over the past week and now trading below both its 50- and 200-day simple moving average. The healthcare sector remains one of the worst performing areas of the market, with XLV down 1.8% year-to-date.
Healthcare watchers see a murkier future for the sector as president-elect Trump’s vague statements on health policy have left people guessing where the federal health law will go from here, CNN Money reports.
“It will be repealed and replaced,” Trump said in a Nov. 13 interview on CBS’ 60 Minutes, vowing to preserve popular provisions of the law, such as ensuring people with preexisting conditions can get insurance and allowing young adults to stay on their parents’ health plans.
Charles (Chip) Kahn, chief executive of the Federation of American Hospitals, said that prior to the election, there was no question over Obamacare’s future “because the working assumption was we had a program that wasn’t going anywhere. That working assumption is now no longer operative.”
Among the most vulnerable to a shake up in the status quo, the hospital industry could be among the worst hit from the proposed changes, which could cause millions to lose health coverage. Looking at ETF options, the iShares U.S. Healthcare Providers ETF (NYSEArca: IHF) would be among the worst off in case of a sell off in the health industry.
Meanwhile, the pharmaceutical and biotechnology sub-sectors may benefit under a Republican president and Congress as the industries are less at risk of price controls that Democrats vowed to impose. Drug pricing has not be mentioned on the health agenda outlined on Trump’s transition website.
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