Study: Insurers have big stake in health reform

'This is a law that's good for consumers and business.'

Bloomberg News
Health insurers will gain $1 trillion in new revenue over the next eight years under the 2010 health care law, assuming it’s upheld by the Supreme Court, according to a Bloomberg Government study. More

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Focus: HEALTH CARE

Study: Insurers have big stake in health reform

'This is a law that's good for consumers and business.'

Bloomberg News
Posted 5/21/12

Health insurers will gain $1 trillion in new revenue over the next eight years under the 2010 health care law, assuming it’s upheld by the Supreme Court, according to a Bloomberg Government study.

The amount is equal to about one-half percent of the nation’s estimated gross domestic product from 2013 to 2020, and insurers led by UnitedHealth Group Inc. would keep about $174 billion – $22 billion a year – for profit and administrative costs. The money comes from U.S. subsidies to people purchasing insurance beginning in 2014 and an expansion of Medicaid, the government’s health program for the poor.

The Supreme Court is weighing whether the law’s requirement that most Americans carry health insurance is constitutional. If it isn’t, the court will decide how much of the law to strike down. Should the law survive the court’s review and Republican efforts at repeal, it is projected to expand insurance to 32 million Americans who lack it by 2016.

“It’s a confirmation of, one, how much money we’re spending as a nation on health care; and two, how much is riding on this court case and the Supreme Court’s decision,” Matt Barry, a Bloomberg Government health analyst and the study’s author, said in a phone interview. “You’re talking an amount of money here that can affect the economy, not just an industry.”

About 9 percent of the insurance industry’s total revenue from 2013 to 2020 hinges on whether the health law stands, according to the study.

Starting in 2014, states are required to open new insurance marketplaces called “exchanges” that will sell subsidized policies to people who don’t get coverage through their jobs. People who earn wages close to the poverty level, about $23,000 for a family of four in 2012, will be made eligible for Medicaid.

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