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Healthcare's Latest Prognosis

Emerging from a third-quarter pullback, healthcare companies are preparing for the next phase of the Affordable Care Act.

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The initial phase of the Affordable Care Act focused on expanding access to healthcare for millions of Americans. Contentious debates aside--and one Supreme Court decision later--the ACA is now heading into its next phase, which will shift attention to improving the quality of care and, more important, reducing the costs of those services. This next phase promises to have profound implications on the healthcare industry, maybe even a bigger impact than the initial rollout.

This new stage of the law comes as healthcare stocks have struggled. A sell-off in late summer caused, in part, by concerns about an economic slowdown in China hit this sector particularly hard. Indeed, the $6 billion  Vanguard Health Care ETF (VHT) is up 7% through October, but in the third quarter, it lost more than 12%.

Rob Wherry does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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