The US healthcare insurance market is the largest in the world, without adhering to WHO’s Universal Health Coverage. Although 8% of the US population does not have a health insurance, the United States continues to top the growth in health premiums in North America.
New York, May 03, 2022 (GLOBE NEWSWIRE) — Reportlinker.com announces the release of the report "United States Health and Medical Insurance Market – Growth, Trends, COVID-19 Impact, and Forecasts (2022 – 2027)" – https://www.reportlinker.com/p06272900/?utm_source=GNW
This growth can be attributed to medical inflation, increasing employment, and some carry-over of the benefits from the former US President Obama’s and Trump’s healthcare policies. According to cdc.gov – Centre for Disease Control and Prevention, the United states spent USD 3.8 trillion in 2019 almost 17.7% of the country’s GDP making the average per person expenditure on health in the United States at USD 11,582 which crossed the USD 12,000 mark in 2020. The US government has laid down numerous health care legislations, to provide health cover to a majority of US population.
According to the NAIC (National Association of Insurance Commissioners), more than 68% of health care coverage was provided by private insurance programs, such as PPOs, HMOs, POS plans, etc. The leading 25 insurers in the United States accounted for about USD 130 billion in 2019, of which more than 60% came from top 25 health insurers. About 6% of Americans purchase health insurance in the non-group type, and 50% have insurance provided by theemployer, 35% have insurances from Medicaid or Medicare and Military whereas over 9% remain uninsured as of 2019.
Increase in the total health expenditure, which includes both public and private spending on the programs that promote health and prevent disease, with the utilization of medical, paramedical, and nursing knowledge and technology
Growth in the overall employment increases the demand for health insurance through both individual and employer-sponsored health coverage
Government regulations and related policy orders effecting a lot of unprecedented changes in the way healthcare coverage is being offered to the American citizens.
The expensive healthcare insurance and an even expensive treatment did not see any improvement even after repeated state intervention due to the highly privatized sector.
Key Market Trends
High Deduction Health Plans Gaining Popularity among Public
These are plans with a higher deductible than any traditional insurance plan. The monthly premium is usually lower, but one pays more health care costs themselves before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing one to pay for certain medical expenses with money free from federal taxes. The IRS defines a high deductible health plan as any plan with a deductible of at least USD 1,350 for an individual, or USD 2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) cannot be more than USD 6,650 for an individual, or USD 13,300 for a family (does not apply to out-of-network services).
The enrollment number for these plans continues to grow YoY, as many employees feel the need to combat the rising healthcare prices. Rising consumerization may continue to drive the tremendous growth of voluntary benefits among employees, and therefore, the HDHPs are gaining popularity, in order to manage costs. The large group market with more than 50 employees remains the most popular setting for HDHP and HAS enrollment, according to AHIP. In 2017, 82% of enrollment occurred in large employer settings, followed by the small-employer market (11%) and the individual market (7%)
The ACA and Health care
0.7 million people were enrolled in coverage through the health insurance marketplaces created under the ACA, including 9.2 million who received premium tax credits and 5.3 million who got cost-sharing reductions. In Florida, Mississippi, Alabama, Nebraska and Oklahoma, at least 95% of marketplace enrollees receive premium tax credits and/or cost-sharing subsidies.
Insurers can no longer deny coverage for pre-existing conditions, charge higher premiums based on health status or gender, revoke coverage when someone gets sick or impose annual or lifetime limits. About 54 million people have a pre-existing condition that could have resulted in them being denied coverage in the pre-ACA individual market. Private insurers now must cover a wide range of preventive services at no out-of-pocket costs to consumers. This includes recommended cancer and chronic condition screenings, immunizations, and other services. Nearly 150 million people are enrolled in employer plans or through individual market insurance that must provide these free preventive services.
Insights on Private Health Insurance (PHI) in the United States
About 60% of the US population utilizes private health insurance services to take care of their health needs. PHI usually covers those that are uncovered, or covered partially, under any public health program. The Trump care had its benefits, it had planned to reduce the federal deficit by USD 150 billion by 2026. The Trump Care increased the health savings account (HSA) contributions from USD 3400 to USD 6550. Trump care also provided subsidies for people with pre-existing conditions and repealed consumer tax on prescription drugs, medical devices and some medical plans as well.
According to US Census Bureau, in 2018, private health insurance coverage stood at 68%, significantly higher than the government coverage (32%). Within the various segments of health insurance coverage, employer-based insurance was the most common, which covered about 56% of the population for few months, or all year, followed by Medicaid (19.3%), Medicare (17.2%), direct-purchase coverage (16.0%), and military coverage (4.8%). Private health insurance spending growth is projected to have increased by 0.5%, to 5.6%, in 2017, partly due to the increase in health insurance marketplace premiums. However, the spending is expected to slow by 0.7%, on an average, for 2019-2020
According to a report from the American Medical Association (or AMA), the private health insurance industry is highly concentrated, with 72% of total metropolitan areas lacking significant health insurer competition.
The Henry J. Kaiser Family Foundation measured the competitiveness of the private health insurance market in 2013, using the Herfindahl-Hirschman Index (HHI) as an indicator. The HHI takes into account how much of a market is controlled by each of the companies competing within it (market share), and is expressed in a value between zero and 10,000. The lower the number, the more competitive the market. Higher concentration from the M&A of various health insurers is expected to raise antitrust concerns among consumers. This is a result of the monopoly power of the health insurer, due to the consolidation, which gives them a leverage to raise and maintain the premiums above the competition levels.
Most of the M&A activities are focused on insurance companies tying up with PBMs, to manage the rising healthcare costs. Few examples include CVS merger with Aetna (USD 69 billion). This merger combines CVS’ pharmacies with Aetna’s insurance business, in hopes of lowering costs. Cigna and Express Scripts closed on a USD 67 billion merger, to lower healthcare costs and deliver better outcomes. Walmart and Humana, which had earlier partnered on a low-cost Medicare Part D prescription drug plan, have an impressive array of medical – PBM – retail capabilities focused on serving the growing medicare advantage market.
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