Politics at Play for This Healthcare ETF

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.

“The GOP bill, which still has a long way before it may become law, would replace Obamacare with a more limited program of insurance subsidies. That would probably result in less comprehensive insurance, increasing the risk that people will be unable to pay hospitals and doctors when they show up for care,” according to Bloomberg.