As the U.S. Supreme Court prepares to consider whether President Barack Obama’s landmark health care reform is constitutional, pundits of all political leanings are hotly debating the impact their ruling will have on Main Street. But regardless of what those six men and three women decide between now and June, the health care paradigm shift that began when the bill became law in 2010 will have a big impact on Wall Street — particularly on health sector investments.
Here’s why: Even if the High Court rules the law unconstitutional, that likely would impact only the so-called “individual mandate” — the requirement that all Americans purchase health insurance or pay a fine. Congress still has the right to regulate health insurance, authorize new taxes and cut budgets for programs like Medicare. And federal agencies will continue to make rules defining how health care companies may conduct business.
So unless Americans elect a new president and Senate next year that are eager to roll back reform, health care companies will have to play the cards they’re dealt. That could mean big challenges for certain niches in the sector.
While the world waits for the Supreme Court to decide, investors might gain an edge by moving out of investments that will be hurt by the law. While some investors have their chips in individual stocks, others seeking a bit more diversity across the whole sector often deal in exchange-traded funds (ETFs), which let you invest in the performance of a basket of stocks, rather betting heavily on a single company. These four health care ETFs stand to lose on provisions of the law:
As of this writing, Susan J. Aluise did not own a position in any of the aforementioned stocks.