can the us healthcare affordable care act (aca) be profitable for insurers

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Can the U.S. Affordable Care Act be more than a Burden?How can ACA be Financially Profitable and Sustainable for Insurers?

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Trends driving the U.S. health insurance industry landscape guided by shift in customer behavior

Medical care is becoming more preventive in nature– General rise in health consciousness – High costs associated with medical treatment/care

driving precautionary wellness

Health insurance is slowly evolving into a B2C industry– Focus on selling health insurance directly to

individuals rather than reaching out to companies

Emphasis on predicting future health risks accurately is on the rise– Enhance profitability by:

□ identifying profitable target markets and groups□ writing profitable products

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Healthcare Ecosystem post Affordable Care Act

Risk-Mitigation-Opportunity-Implication Matrix – A Snapshot

Affordable Care Act adds to the difficulty by propounding a difficult path laden with risk of declining margins for health insurers

ACA imposes numerous regulatory mandates for the U.S. health insurance industry

WNS DecisionPointTM analyzed several opportunities and risks arising due to ACA and suggests mitigation measures and implications to deal with the revised health insurance landscape

The Patient Protection and Affordable Care Act, generally called the Affordable Care Act (ACA), was enacted in March 2010 since the U.S. had to: Reduce overall healthcare cost Expand the insured population pool Improve advanced care needs Reduce bad debts and revive antiquated healthcare

ecosystem

RiskMLR should be 80%-85%,else shortfalls have to be refunded to customers

Premiums should be gender/pre-existing medical conditions agnostic, making writing affordable premiums difficult

Mitigation measures

Provide preventive care to people to decrease % of sick and lower claims

Understand current and future health trends to minimize impact arising from related risks

Opportunities Insurers can tap ~41 million uninsured Americans

ImplicationDesign competitive and profitable products post comprehensive assessment of underlying risks in specific markets

For a complete view of the Risk-Mitigation-Opportunity-Implication Matrix, please download the full report

Clearing House

$

Insurance cover

Insurance cover$

Tie-ups

$

Approved claims

Claims

Hospitals

Individual care givers

Pathology Lab and Diagnostic Centers

ACOs

Treatment / Care

Medical device

$

Medicinal drugs

$

Medical Device Manufacturers

Pharmaceuticals Companies

Change brought in post Obamacare Act

Uninsured Population

Insured Population

Insurance Market place

Private Insurer State Federal

Healthcare Provider


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RoE of top 10 U.S. health insurers deteriorated in 2015 compared to 2009 due to operating inefficiency

Decision Areas Mid-size* Large* Performance

Product Development

Limited product innovation Offer innovative products and services like telemedicine

Conducts interviews with individuals, doctors and hospitals to comprehend product needs

Limited use of sophisticated analytics to analyze which markets to serve, what kind of products to develop

Understands individual customer needs by leveraging analytics on claims data

Use the above insights on claims data to decide markets entry and targeting strategies

Pricing

Use basic actuarial forecasting

Lower premium prices as administrative expenses are low

Predictive modeling using statistics from Federal Government, hospitals and doctors etc

-40

-20

0

20

40

60

UnitedHealthGroup

Incorporated

Anthem, Inc. Aetna Inc. Humana Inc. Cigna Corp. CenteneCorp.

WellCareHealth Plans,

Inc.

MolinaHealthcare,

Inc.

Triple-SManagementCorporation

UniversalAmerican

Corp

Growth in A&H Premiums Earned (%)

2011 2012 2013 2014 2015

0

25000

50000

Anthem, Inc. Aetna Inc. Humana Inc. Centene Corp. WellCare HealthPlans, Inc.

MolinaHealthcare, Inc.

Total Medical Membership (thousands)

2010 2011 2012 2013 2014 2015

*U.S. health insurers with latest annual revenues greater than $1 billion were classified as ”large” companies, while those with revenues less than $1 billion were classified as “mid-size” ones# Payor value chain includes product development and pricing, sales and marketing, care management programs, strategic alliances and risk management

For a complete view of the U.S. health insurers’ maturity state across the payor value chain and financial performance, please download the full report

WNS DecisionPointTM conducted a detailed study of 20 health insurance companies in the U.S., supplemented by expert interviews to: Gather insights on their financial performance Estimate the maturity state of health insurance companies belonging to two tiers* and across the payor value chain#


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The current financial scenario demands heath insurers to relook at their business models

For a detailed view of the recommendations, please download the full report

However, for the U.S. health insurers it is

crucial to outgrow their traditional roles, become ineludible partners in medical care by focusing on

ways to improve care management and remain profitable

The question but, is HOW?-0.05

-0.04

-0.03

-0.02

-0.01

0.002009 2015

Average Underwriting Profit

Top 10 U.S. health insurers experienced diminished operating efficiency and decline in underwriting profits in 2015 compared to 2009

Attainment of cost efficiency is imperative in such a scenario



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can the us healthcare affordable care act (aca) be profitable for insurers

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