XHS, as has been previously noted, is intimately levered to the Obamacare trade because the ETF allocates a significant portion of its weight to healthcare facilities stocks, including some of the aforementioned hospital operators. XHS also devotes a big chunk of its weight to managed care providers. Some investors may not want to hear it, depending on their personal politics, but Obamacare has made those exposures in XHS all the more beneficial.
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.
“While hospital stocks could see the greatest impact from the bill’s passage, the downward pressure would no doubt spill over into just about every area of the healthcare sector. The insurance providers might also be looking at a smaller customer base to work with and, if the sale of insurance across state lines becomes a reality, prices might be forced to come down amid greater competition. The service providers would be a downstream casualty of weaknesses in the hospital group. Fewer customers could mean lower demand for their services as well,” according to ETF Daily News.