The Supreme Court ruling on health-care reform known as the Patient Protection and Affordable Care Act (PPACA) does not have a significant impact on the overall healthcare sector. There are short-term winners and losers but the big picture view is largely unaffected. In fact, a smart investor can still use health stock mutual funds as a smart portfolio diversification tool.
As is normally the case with high profile rulings such as the PPACA, there are short-term winners and losers. The winners here are primarily in the managed-care sub-sector of health care (i.e. Tenet Healthcare Corp and Laboratory Corporation of America) and the losers are primarily in the insurance industry (i.e. Aetna Inc and Cigna Corporation).
Overall, however, the market had already priced in a Supreme Court ruling in favor of the healthcare legislation so today's impact on the broad market and the health sector as a whole is a minimal event, especially from the long-term perspective. In fact the Vanguard Health Care ETF (VHT) lost 0.37% of its value today while the stock market, as measured by the S&P 500, lost 0.21% -- an insignificant differential.
Smart investors can still use health care as a useful diversification tool to help build a solid portfolio of mutual funds. A good way to gain broad exposure to the healthcare industry is through the use of a health sector mutual fund, such as Vanguard Health Care (VGHCX) or T. Rowe Price Health Sciences (PRHSX).