Soon after the Affordable Care Act (ACA), also known as Obamacare, was passed several years, winners among healthcare sector and industry exchange traded funds started emerging. One of those winners was the SPDR S&P Health Care Services ETF (NYSEArca: XHS).
However, that also makes an ETF like XHS vulnerable to Republican efforts to repeal Obamacare. Hospital stocks were seen as big winners under Obamacare because with more Americans having access to health insurance, hospital operators would be able to be compensated for more procedures and services while providing fewer services for free.
Additionally, the actuaries calculated that around 8.4 million Americans became insured in 2014 and noted their increased use of medical services. The number of people on Medicaid is projected to increase to 78.1 million by 2024, outstripping Medicare, which is expected to have 70.3 million enrolled.
The uninsured rate has declined significantly since late 2013, before the the ACA, or Obamacare, took effect. More Americans gaining access to health insurance could bolster the long-term thesis for ETFs such as XHS. But efforts to repeal Obamacare challenge that investment thesis.