After a slew of announcements early Monday prompted speculation that a decision on health care legislation was imminent, we learned that Thursday will be the day for one of the most heavily anticipated rulings in the last several years. The Supreme Court is expected to issue a ruling on the health care legislation that was passed in 2010, bringing a conclusion to years of legal wrangling and politicking behind the scenes. The justices are expected to issue a split opinion, and analysts have been divided over how they will rule. Given the far-reaching impact of the decision, the health care sector figures to see increased scrutiny and trading volumes throughout the week.

Analysts see a wide range of possible outcomes in the wake of the Supreme Court ruling, with potential positives and negatives for the health care industry. In a recent research note, S&P Capital IQ ETF Analyst Todd Rosenbluth outlined three possible scenarios for Thursdays announcement and gave some thoughts on what each would mean for the health care sector [sign up for the free ETFdb newsletter]:

Under this scenario, which is deemed to be the most positive for the health care industry, the Supreme Court would essentially side with the Obama administration and rule that the mandate for individual insurance is constitutional and can be implemented as scheduled. This could represent a win for the health care sector since it would lead directly to an inflow of more than 30 million additional insured customers over the next several years (beginning in 2014).

In the current political environment, however, this scenario could lead to additional uncertainty for the health care industry. Republican presidential candidate Mitt Romney has vowed to repeal the health care package if elected, which could lead to additional doubt over the long term prospects for the law if the November election is close as expected. The implementation and subsequent repeal of the entire law would translate into major expenditures for the health care sector, potentially creating a short term drag on efficiency and profit margins.

This is the best case scenario for health care ETFs

Another possibility is that the Supreme Court determines the individual mandate to be unconstitutional, and further rules that the mandate is a primary component of the legislation. That would mean that the individual mandate cant be stripped out from the rest of the law, and the Court would effectively invalidate the entire law. This would lead to healthcare reform eventually being rolled back entirely, which would likely be a complex process.

S&P sees this as a neutral outcome for the health care sector in general; while the loss of millions of new insured individuals would dramatically reduce growth potential, the elimination of the various fees, taxes, and regulations that are part of the overhaul would disappear as well.

This scenario would likely be neutral to health care ETFs

This hybrid scenario could be the worst possible outcome for the health care industry. Its very possible that the Court rules the individual mandate unconstitutional but allows the rest of the law to be implemented as planned. That could be the worst of both worlds for health care providers; the pipeline of 30 million new insured Americans would essentially be emptied, while the various taxes and regulatory burdens would remain in place. According to the Congressional Budget Office, striking down the individual mandate would result in about 16 million additional Americans obtaining health insurance. Many of those would come through the expansion of Medicaid, which would weigh on profit margins of health care companies.

This is the worst case scenario for health care ETFs

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Obamacare & Health Care ETFs: What You Need To Know