Effects of Aca on Health Insurance

2 Effects of ACA on the Health Insurance Industry

Abstract

This paper analyzes the economic effects of the health insurance industry in the post-ACA era. It

examines the increase in premiums, market share, accompanied by mergers threatening to

decrease market concentration and policy changes expanding programs such as Medicare and

Medicaid over the course of a decade. It will compare data from the pre and post-ACA era for

the change in profits and market share. Along with exploring the case studies for recent failed

mergers of Aetna & Humama and Anthem & Cigna cause by threats of anti-competitive

behavior. With the implementation of ACA (Affordable Care Act) in 2014, the industry has been

expanding with market leaders in the private sector such as: United, Anthem, Aetna, Cigna, and

Humana. With the policy changes brought by ACA, the number of insured people has increased,

however; the burden to insurers to lift profits has been significant. The market is likely to see

more mergers among health players and a shaky road ahead for the ACA under the new

administration.

3 Effects of ACA on the Health Insurance Industry

The United States spends about 17% of their GDP on health care, the largest compared to

any country in the world (Gruber n.d.). However, increasing spending is not directly correlated

with the rate of growth people are receiving. This is due to the lack of universally provided

health care. One out of every five population under 65 does not have access to health care

(Frostin, 2010).

The main source of insurance in the U.S. is Employer-Sponsored Insurance (ESI),

providing large subsidies to the majority of the population under 65. Followed by public

insurance coverage, Medicare, a universal insurance program for the elderly in the US, and

Medicaid, coverage for low-income families. However, the population with the lowest coverage

is the “working poor,” whose income and age do not allow them the public coverage and aren’t

offered insurance from their jobs. For those in this circumstance usually, have to