Uncertain Prognosis: Industries Impacted by Health Care Reform
by Terri Eyden on
By Anna Son, IBISWorld Health Care Industry Analyst
With 2014 only a few months away, a major milestone in US health care history is drawing near. Three years have passed since President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law in March 2010, and the most significant provisions are finally set to kick in. While many health care reform provisions have already been implemented, the key provisions will not take full effect until January 2014.
These provisions will not only drastically change the way Americans access and pay for health care services, but they will also transform the entire health care delivery system, affecting virtually every provider, consumer, and payer in every state, city, and local community. The PPACA is projected to expand health care coverage to about 27 million previously uninsured Americans by 2017, according to Congressional Budget Office estimates.
IBISWorld examined its database of more than 1,000 US industries and identified those that are most affected by health care reform and preparing for the oncoming changes. The following markets contain companies in need of compliance advisory services to minimize potential losses and capitalize on the legislation's benefits. The new regulations present opportunities for accountants to proactively reach out to existing clients, build relationships, and increase billable hours, in addition to identifying and winning new business.
Health care payers
Health care reform will likely have the greatest impact on the health and medical insurance industry, with a mixed bag of benefits and drawbacks. Health insurance carriers are expected to benefit from an influx of newly insured patients through the insurance exchange and expansion of government programs, such as Medicare and Medicaid. Nevertheless, health insurance companies should prepare to face roadblocks pertaining to new regulations, including bans on preexisting exclusions for adults and children, all annual or lifetime limits, and charging higher rates to sick customers.
In light of increasing demand for health care services, along with uncertainty and cost pressures stemming from health care reform, larger health insurers are continually acquiring smaller players to achieve economies of scale and diversify their customer base and service offerings. This is particularly evident in the government-sponsored insurance market, which is poised for strong growth due to the expansion of coverage under Medicare and Medicaid. For instance, insurance goliaths WellPoint, Aetna, and Cigna all acquired smaller Medicaid-focused coverage providers to bolster their government business in 2012. This activity demonstrates the recent trend of large insurers acquiring physician practices to guarantee their patients adequate access to primary care in light of anticipated physician and nurse shortages. Furthermore, to meet new rebate requirements, health insurance carriers will likely alter their pricing and modify product features and benefits.
Health insurance companies will likely become more cooperative with health care providers to achieve maximum returns. For instance, according to health insurance giant Aetna, the company is altering its 160-year business model to stay abreast of regulatory changes by aiming to become a community-based organization. With this new model and an increased willingness to share proprietary technology and information to achieve the best outcomes, Aetna is shifting its focus away from negotiation and toward a partnership model with health care providers. These are a few of the tactics that small and midsized insurers may look to adopt in an effort to proactively hedge against potential losses upon compliance. In turn, insurance companies will seek accounting and consulting services to help them become adept at capitalizing on opportunities in the new-era insurance market.
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1 week 4 days ago by mucar1990