Health Insurance ETFs in Focus as RFK Jr Takes Over HHS

Robert F. Kennedy Jr. has been sworn in as Secretart oy Health and Human Services (HHS), a move that could shake up the healthcare sector—including health insurance stocks and the ETFs that hold them. ETFs like iShares U.S. Healthcare Providers ETF IHF and SPDR Select Sector Fund – Health Care XLV, which carry major insurers such as UnitedHealth Group Inc. UNH and Elevance Health, Inc. ELV, could be particularly impacted by regulatory shifts under Kennedy’s tutelage.

Investors tracking the health insurance sector should watch ETFs that have exposure to UnitedHealth and Elevance Health. We will come to the reason in a while, but first, here are some ETFs that hold the stocks:

iShares U.S. Healthcare Providers ETF– This ETF focuses on healthcare providers and insurers, with the topmost weightings in UnitedHealth and Elevance Health. It provides targeted exposure to managed care companies, hospitals, and specialized healthcare services, making it particularly sensitive to regulatory changes affecting health insurers.

SPDR Select Sector Fund – Health Care– A broad-based healthcare ETF that includes not only major health insurers but also pharmaceutical and biotech companies. UnitedHealth is one of its largest holdings, meaning any regulatory action against insurers could impact its performance. Additionally, the fund’s significant exposure to vaccine makers like Pfizer PFE and Moderna MRNA adds another layer to the concerns under Kennedy's leadership.

Also Read: Robert F. Kennedy’s Confirmation: Cannabis Advocates Question His New Vow To ‘Follow The Science’ On Marijuana’s Harms

What's At Stake For Health Insurance Stocks?

On Feb. 13, the Senate voted 52 to 48 to confirm Kennedy as the overseer of key agencies such as the Food and Drug Administration (FDA), Centers for Disease Control and Prevention (CDC), and Centers for Medicare and Medicaid Services (CMS).

During his Senate hearings in January, Kennedy denounced what he called the "rapacious behavior by insurance companies." He has suggested that he would support efforts to rein in abusive industry practices, including denying care and overcharging the government.

Two major players in the space that could be affected by potential policy shifts include UnitedHealth, who is the largest Medicare Advantage insurer in the U.S., and Elevance Health, a major Medicaid managed care provider.

Naturally, stricter policies on claim approvals and government reimbursements could create headwinds for the aforementioned funds’ major holdings.

Additionally, Kennedy’s appointment comes at a time when healthcare costs are soaring, and the spread of bird flu among wild birds and poultry farms is raising pandemic concerns. He has been a longtime vaccine skeptic, a stance that could have ramifications for pharmaceutical companies producing vaccines. Notably, he has questioned the safety and efficacy of bird flu vaccines, which can be bad news for vaccine-makers like Pfizer and Moderna.

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