Insurers could earn $1 trillion in revenue from reform law
If the U.S. Supreme Court upholds the health reform law when it issues a decision next month, insurers stand to make $1 trillion in new revenue during the next eight years, according to a Bloomberg Government study released Monday.
Of that $1 trillion, which comes from insurance subsidies and Medicaid expansion, insurers would get about $174 billion, or about $22 billion a year, for profit and administrative costs, Bloomberg reported.
The total figure amounts to roughly one-tenth of the health insurance industry's total revenue and about one-half percent of the projected U.S. gross domestic product through 2020, reported The Hill's Healthwatch.
"It's a confirmation of, one, how much money we're spending as a nation on healthcare; 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, told Bloomberg. "You're talking an amount of money here that can affect the economy, not just an industry."
The study estimated that the reform law's expansion of Medicaid will cost the federal government $669 billion, while subsidizing private insurance premiums will cost taxpayers $557 billion. Those two provisions account for about 98 percent of all new spending under the law. Insurers would see about 58 percent of that spending, as well as another $322 million from consumers' share of premiums, The Washington Post Wonkblog noted.
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