Short U.S. Health Care Providers has been on MRP’s list of themes since October 16, 2017, and we’ve been monitoring its performance with the US Healthcare Providers ETF (IHF). In the 8 months since initiation, the theme has gone against us, with the IHF rising 26% versus the S&P’s gain of 7.8% and the more diversified Healthcare ETF (IYH) climbing just 4.3% over the same period.
Half of the IHF’s exposure is to insurance companies, and they have benefited from President Trump’s rollback of some onerous coverage obligations mandated under the Affordable Care Act (“Obamacare). While this administration has also discontinued funding for Obamacare Cost-sharing Reduction Subsidies (CSRs), which reimbursed insurers for discounted care provided to low income Americans, the insurance groups have been able to raise premiums on other segments of the insured population to recoup some of that short fall. This compels MRP to close the Short US Health Care theme in its current form.
In its stead, we would like to highlight two segments of healthcare undergoing change and which we think investors should pay attention to . . .