CHICAGO, March 21, 2013 /PRNewswire/ -- Today, Zacks Equity Research discusses the U.S. Health Insurance, including UnitedHealth Group Inc. (NYSE: UNH) , CIGNA Corp. (NYSE: CI) , WellPoint Inc. (NYSE: WLP) , Aetna Inc. (NYSE: AET) and Coventry Health Care Inc. (NYSE: CVH).
A synopsis of today's Industry Outlook is presented below. The full article can be read at
The health insurance industry has confronted many external challenges in the recent past, such as federal, state legislative and regulatory reforms, inability to meet the demand of more price- and service-conscious consumers, a fiercely competitive market, shift of customer mix and uncertain economic conditions in the U.S. and abroad, just to name a few.
Notwithstanding the headwinds, the industry is thriving under stress. Most of the top six players -- UnitedHealth Group Inc. (NYSE: UNH) , CIGNA Corp. (NYSE: CI) , WellPoint Inc. (NYSE: WLP) , Aetna Inc. (NYSE: AET) and Coventry Health Care Inc. (NYSE: CVH) -- ended 2012 on a high note with impressive earnings growth in the final quarter. Most of the carriers even raised their 2013 earnings estimates.
About the Industry
The health and medical insurance industry is an integral part of the U.S. economy. According to the Centers for Medicare and Medicaid Services, U.S. health expenditures account for about 18% of the country's annual GDP. According to the World Health Organization, health care expenditure per person in the United States is the highest in the world.
Despite huge sums of money spent on health care, millions of Americans lack health insurance coverage or are underinsured. This was largely attributed to a dysfunctional health care system, which was working for the past several years. To rein in the wastage and make health care more accessible effective and affordable, President Obama came out with the Health Care Reform in an attempt to overhaul the nation's ailing health care system.
Health Care Overhaul
The Patient Protection and Affordable Care Act (PPACA), which was passed in 2010, marked the beginning of a multiyear implementation process. It is the most substantial overhaul in the history of the nation's health care sector.
The reform was intended to provide coverage to the 32 million uninsured Americans. The primary focus was to make health care facilities more affordable, expand coverage for customers with pre-existing health conditions and keep a check on health insurers.
Certain significant provisions of the legislation were: mandated coverage requirements, rebates to policyholders based on minimum benefit ratios, adjustments to Medicare Advantage premiums, the establishment of state-based exchanges, greater investment in health IT, annual insurance industry premium-based assessment, reduction in Federal assistance on Medicare Advantage, restriction on rescission of policies and elimination of annual as well as life time maximum limits.
The Reform had a rough patch since inception with opponents challenging its individual mandate and Medicaid expansion clause as well as dragging it to court. Insurers lobbied against most of its provisions and opposition political parties swore to repeal the whole law if they were elected. But the law survived the challenges with the Supreme Court upholding the constitutionality of its individual mandate – the core of the reform.
Also, the re-election of Barack Obama provides the necessary ratification to the health care reform. That said, the full implementation of the reform is far from guaranteed given the substantial leeway states enjoy in enforcing key parts of the legislation, particularly the setting up of exchanges and expansion of Medicaid.
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