This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Health Care Plan Poses Risks for ETFs

As the Senate took the U.S. one step closer to national health care on Sunday, some ETFs in the sector could face a second round of Obama-inspired losses. As billions of new taxes are levied on insurers, large pharmaceutical companies and medical device makers, health care subsector exchange-traded funds will face different challenges.

The increasingly likely health care law could smother recent gains seen by medical devices and pharmaceutical ETFs, like the iShares Dow Jones U.S. Medical Devices (IHI) and iShares Dow Jones U.S. Pharmaceuticals (IHE).

ETFs that track health care providers, like the iShares Dow Jones U.S. Healthcare Providers (IHF), and biotech companies, like the iShares Nasdaq Biotechnology ETF (IBB), may already have seen the worst of their losses.

The initial hit to health care ETFs came in the wake of President Obama's election. As plans for sweeping reform materialized, ETFs across health care's subsectors were impacted. In 2008, IHI and IHE dropped 36.79% and 14.91%, respectively.

IHF, which tracks health care providers like UnitedHealth Group (UNH) and WellPoint (WLP), fell 43.46%, while IBB fell 12.28%.

In 2009, as health care reform appeared to be sinking while the market recovered, health care ETFs reversed course. Year to date, IHI and IHE are up 35.74% and 27.89%, respectively.

IHF and IBB also have been on the upswing in 2009. Year to date, IHF is up 34.85% while IBB has increased 11.68%.

While the broad spectrum of narrowly focused health care ETFs have, thus far, moved as a group, the transformation and passage of the health care reform bill could send these funds in different directions.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs