Please ensure Javascript is enabled for purposes of website accessibility The affordable care act lives on - Janus Henderson Investors
For financial professionals in Luxembourg

The affordable care act lives on

Andy Acker, CFA

Andy Acker, CFA

Portfolio Manager

21 Jun 2021

The Supreme Court dismissed the latest challenge to the seminal legislation that has expanded health care coverage in the US over the past decade. Research Analyst Rich Carney explains what it means for the health care sector.

Key takeaways:

  • The US Supreme Court dismissed the latest challenge to the Affordable Care Act (ACA), minimising the risk of disruption to the health care system.
  • While the road leading up to the decision was marked by volatility in health care stocks, the outcome was largely expected.
  • With Democrats maintaining a slim majority in Washington, DC, and more people signing up for coverage through the ACA, we believe lawmakers will work to expand the law’s reach, with potential benefits for health care.

Die another day – or maybe never. On Thursday, the U.S. Supreme Court dismissed the latest challenge to the Affordable Care Act (ACA), the seminal legislation signed into law in 2010 that expanded health care access in the U.S.

In a 7-2 vote, the justices ruled the plaintiffs did not have legal standing to challenge the ACA, ending yet another attempt to “repeal and replace” the legislation. While the odds of the ACA being overturned were low from the start, the road to the court’s decision took several turns.

The market reacts

The long view: a win for health care

In our view, the larger impact is that the court’s decision now reduces uncertainty about the future of the ACA, which provides medical coverage for 31 million Americans.3 We expect the legislation will not only survive but expand. In March, Congress passed the $1.9 trillion American Rescue Plan Act, which included additional subsidies for those buying coverage through the ACA’s individual market. During a special three-month open enrollment period that launched in mid-February, one million Americans signed up. The expanded subsidies expire at the end of 2022, but Democrats are seeking to make the financial support permanent.

We think the Biden administration will continue to strengthen the ACA, including encouraging states that have not broadened Medicaid eligibility under the law to do so. (Medicaid is the nation’s public health insurance program for people with low income.) As such, some health care stocks could endure less volatility: the more that people become insured through the ACA, the less political will there’ll likely be to repeal the law. Furthermore, the ACA’s expansion could benefit health care providers that help administer plans while demand for medical devices, prescription drugs, and health care services and products could rise.

The ACA is not without fault and has created pathways to limit drug prices and payments to hospitals and other providers. But there would be a significant cost of overturning the law, which now touches almost every part of the U.S. health care system and provides coverage for millions of people. We believe that justifies letting the legislation live another day.


1Bloomberg, as at 21 September 2020.

2Bloomberg, as at 17 June 2021.

3“Health Coverage Under the Affordable Care Act: Enrollment Trends and State Estimates,” Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, 5 June 2021.



These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.


Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.


The information in this article does not qualify as an investment recommendation.


Marketing Communication.






Important information

Please read the following important information regarding funds related to this article.

The Janus Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985, managed by Janus Henderson Investors Europe S.A. Janus Henderson Investors Europe S.A. may decide to terminate the marketing arrangements of this Collective Investment Scheme in accordance with the appropriate regulation. This is a marketing communication. Please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions.
    Specific risks
  • Shares/Units can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • Shares of small and mid-size companies can be more volatile than shares of larger companies, and at times it may be difficult to value or to sell shares at desired times and prices, increasing the risk of losses.
  • If a Fund has a high exposure to a particular country or geographical region it carries a higher level of risk than a Fund which is more broadly diversified.
  • The Fund is focused towards particular industries or investment themes and may be heavily impacted by factors such as changes in government regulation, increased price competition, technological advancements and other adverse events.
  • The Fund may use derivatives to help achieve its investment objective. This can result in leverage (higher levels of debt), which can magnify an investment outcome. Gains or losses to the Fund may therefore be greater than the cost of the derivative. Derivatives also introduce other risks, in particular, that a derivative counterparty may not meet its contractual obligations.
  • If the Fund holds assets in currencies other than the base currency of the Fund, or you invest in a share/unit class of a different currency to the Fund (unless hedged, i.e. mitigated by taking an offsetting position in a related security), the value of your investment may be impacted by changes in exchange rates.
  • When the Fund, or a share/unit class, seeks to mitigate exchange rate movements of a currency relative to the base currency (hedge), the hedging strategy itself may positively or negatively impact the value of the Fund due to differences in short-term interest rates between the currencies.
  • Securities within the Fund could become hard to value or to sell at a desired time and price, especially in extreme market conditions when asset prices may be falling, increasing the risk of investment losses.
  • The Fund may incur a higher level of transaction costs as a result of investing in less actively traded or less developed markets compared to a fund that invests in more active/developed markets.
  • The Fund could lose money if a counterparty with which the Fund trades becomes unwilling or unable to meet its obligations, or as a result of failure or delay in operational processes or the failure of a third party provider.