Health care stocks have outperformed the broader market since the passage of Obamacare, rising 55% compared to a 40% increase in the S&P 500. Click the chart to track the Health Care Select Sector SPDR ETF.
NEW YORK (CNNMoney)
Insurance companies UnitedHealth (UNH, Fortune 500), Cigna (CI, Fortune 500) and Aetna (AET, Fortune 500) have all climbed about 100% since Obamacare was signed into law. They initially got a boost as investors anticipated that the law, which requires Americans to have health insurance beginning in 2014 or pay a penalty, would result in millions of new customers.
New state-based exchanges open for enrollment this week, but analysts note that many major insurers are not going to take part on them yet. So investors should not expect another Obamacare bump for these stocks in the short-term.
But insurers that specialize in Medcaid, such as Molina (MOH, Fortune 500) and Centene (CNC, Fortune 500), could benefit sooner, said ClearBridge Investments health care analyst Marshall Gordon. Though only a little over half of the nation's states are opting to expand coverage for their low-income residents, Gordon expects more will eventually sign on.
Related: Obamacare cheat sheet
Major hospital operators Tenet Healthcare, (THC, Fortune 500) Community Health System (CYH, Fortune 500) and HCA Holding (HCA, Fortune 500) have also gained considerable ground thanks to the legislation.
"Hospitals currently get stuck paying for a lot of uninsured patients when they come to the emergency room," said Charles Sizemore, chief investment officer at Sizemore Capital Management. He expects the increase in the number of insured Americans to help increase revenue and limit the debt burden at hospitals, but he added that this is mostly factored into their stock prices already.
Still, Obamacare is not the only reason why the health care sector has done so well for the past three years.
The real stars of health care have been biotechnology companies. In fact, the S&P 500 biotechnology index is up a whopping 60% just this year -- more than any other part of the health care sector.
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Obamacare and biotech boost health care stocks
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