The Obama administration introduced the Affordable Care Act (ACA) in an attempt to temper medical cost inflation and decrease the uninsured rate. For this reason, industry research firm IBISWorld has updated a report on Health & Welfare Funds.
NEW YORK, Dec. 29, 2016 /PRNewswire/ — The industry provides healthcare coverage and welfare-related benefits to employees, unions and other professional associations. Thus, industry operators function in a similar manner as pension funds and other employee benefit programs.
For the full report, visit IBISWorld’s Health & Welfare Funds in the U.S. industry report page.
In the five years to 2016, industry revenue is expected to decrease an annualized 2.0% to $189.3 billion. Over this period, a consistent increase in healthcare expenditures (i.e. medical cost inflation) forced industry operators to consistently raise premiums and increase reserves to ensure healthcare liabilities are properly funded. This occurrence, combined with a relatively weak and volatile stock market, has taken its toll on industry profit margins. Weak profitability has driven the number of industry enterprises to nearly stagnant growth.
According to IBISWorld Industry Analyst Kelsey Oliver, “The ACA, which took full effect in 2014, could prove to be detrimental for this industry because the legislation does not provide it with subsidies that are afforded to subscribers of for-profit plans.” Industry operators fear that this will discourage union membership, a major driver for the industry, and could reduce revenue. Nevertheless, the effect ACA will have on this industry remains unclear. Overall, in the five years to 2021, industry revenue is expected to grow at a moderate annualized rate.
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IBISWorld Industry Report Key Topics
Products & Markets
Globalization & Trade
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