Ready or Not, Health Care Reform Is Coming

At a time when President Obama's approval ratings are declining, the nation's economy is still struggling and it appears that nothing is really happening in Washington to ignite a much-needed spark to boost consumer confidence, a health care bill in some form will have to pass.

The largest obstacle that the pending overhaul of the health care system is facing is cost. In a nutshell, the president wants to curb costs while expanding health insurance coverage to many of the 46 million uninsured Americans, which has a trillion dollar price tag attached with it.

On the one side, some are arguing that a government-run health care option would place stiff competition on private insurers, which could potentially be detrimental to the insurance industry and the employer-based insurance model used by the majority of Americans.

On the other side, critics are stating that the reform does not have enough cost savings involved with it. One big part of the proposed reform includes a piece that would have Medicare and insurance companies cut nearly 5% of the nation's annual medical bill by refusing to pay for care for complications due to doctor or hospital error.

Many believe that the reform is focused on narrower issues such as taxing medical benefits and cutting hospital prices and is overlooking the quality issue, which in the long run will be the most cost effective.


Regardless of the final outcome of the health care reform, a bill will be passed. The president and his administration cannot afford not to have one pass and the following stocks and ETFs will feel its effects.

Tenet Healthcare(THC:NYSE): up 232% to close at $2.99 on July 10 after witnessing a March low of 90 cents.

UnitedHealth(UNH:NYSE): up 51% to close at $24.67 on July 10 after closing at $16.35 in March.

Vanguard Healthcare(VHT:NYSE): rebounding nicely with a June 10 close of $45.09, an increase of 20%, after witnessing a $37.58 close in March,

Healthcare Select Sector SPDR(XLV:NYSE): up 17% after seeing a low of $21.88 in March to close at $25.64 on July 10.

These gains are phenomenal and it appears that one can't lose with health care; however, when dealing with the previously mentioned equities, it is imperative to keep in mind that they involve risks. The best way to alleviate these risks is to utilize an exit strategy.

According to the latest data from SmartStops.net, here are the price levels where the uptrend of these stocks and ETFs would be over: Tenet Healthcare at $2.65; UnitedHealth at $22.41; Vanguard Healthcare at $44.09; XLV at $24.95. These levels change daily and updated data is free at SmartStops.net.