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NEW YORK (
TheStreet) -- 2011 was a good year for the health care sector.
According to data from
S&P Capital IQ, the group was one of only two sectors out of 10 major categories within the
S&P 1200 to deliver positive returns on both a price and total return (including dividends etc.) basis, rising 8% and 11.2%. The other was consumer staples.
The Patient Protection and Affordable Care Act was
signed into law in March 2010. Among the law's provisions are insurance companies needing to justify rate increases of 10% or more, allowing people under 26 years of age to stay on their parents' health care plans, and a patient's bill of rights.
Wells Fargo thinks the mandate that individuals must have insurance looks vulnerable, pinpointing Justice Anthony Kennedy as possessing a "key swing vote" in a recent research note, and the firm anticipates he will deem the mandate "unconstitutional" and rule to separate it from the rest of the legislation.
The firm estimates there is a "very small probability" the Supreme Court will overturn the legislation completely or specifically find the Medicaid portion of the law unconstitutional, and sees the overall risk to health insurers as limited.
"[W]e believe the states or the federal government would likely fix any damage this ruling might cause to the insurance exchanges and the individual market before the market changes occur in 2014," Wells Fargo said.
Another wild card for 2012 is the presidential election in November with Wells Fargo raising the possibility that ""the expected Medicaid expansion in 2014 could be defunded after the November elections."
three health care stocks that analysts think highly of headed into next year.