Advertisement

Health Insurers Stand To Gain $200 Billion From Affordable Care Act’s Exchanges

A new report from PricewaterhouseCoopers finds that far from “ending” the private health sector — as some GOP opponents of the Affordable Care Act predicted — Obama’s health care reform law will actually serve as a boon to private insurers, confirming fears that excluding the public option from the final bill could undermine affordability.

According to the new report, the law’s state-based health care exchanges provide private insurers with a lucrative new market in which they stand to gain up to $200 billion in revenue by 2019:

In 2014, an estimated 12 million consumers will choose health insurers in a new, tightly regulated marketplace where choice will be king.

That marketplace will encompass different state health insurance exchanges (HIXs) where health insurers compete for nearly $60 billion in premiums. And that’s just the start. By 2019, an estimated 28 million Americans will buy health insurance through this new online channel.

Advertisement

PwC estimates that by then, the HIXs will have grown to nearly $200 billion in premium revenue. Insurers will compete head to head for individuals who will be required to buy their product but be able to comparison shop like never before. […]

More than half of insurance executives surveyed by PwC expect to see an increase in their individual business, and nearly half expect growth in their small group business.

Look:

To maximize profits, the insurers surveyed in the study are also “hoping that states opt for a variation of the open market model, such as the one used in Utah, where any insurer can sell policies on the exchange as long as it meets certain minimum benefit requirements.” Additionally, the study reported, “Only 10 percent of insurance executives surveyed prefer the active purchaser model where the state evaluates and selects insurers in a competitive bidding process.”

Read the full report here.