Insurers To Lose $1T if Reform Law Is Struck Down, Report Finds

U.S. health insurers would lose nearly $1 trillion in new revenue between 2013 and 2020 if the U.S. Supreme Court strikes down the federal health reform law, according to a report by Bloomberg Government, The Hill's "Healthwatch" reports (Viebeck, "Healthwatch," The Hill, 5/15).

According to the report, the bulk of the lost revenue -- $880 billion -- would come from the additional 16 million U.S. residents that the health reform law is expected to help purchase coverage on the individual market. The remaining $220 billion in lost revenue would come from new beneficiaries under the overhaul's Medicaid expansion.

The $1 trillion figure represents about 9% of overall revenue that insurers are expected to bring in during the eight-year period (Kliff, "Wonkblog," Washington Post, 5/15). The estimated loss of revenue would be equivalent to 0.5% of the projected U.S. gross domestic product in that time period (Sanger-Katz, National Journal, 5/15).

According to the "Wonkblog," most of the insurers' revenue essentially would go toward covering the health care costs of more policy subscribers. A rule under the overhaul requires insurers to spend at least 80% of every premium dollar on direct medical costs ("Wonkblog," Washington Post, 5/15) However, the report estimates that insurers would be able to keep $174 billion in profits over the eight years if the law is upheld.

Bloomberg Government health analyst Matt Barry, who prepared the report, said, "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." He added, "You're talking an amount of money here that can affect the economy, not just an industry" (Wayne, Bloomberg, 5/14).

Barry has started to examine how other industries could be affected if the health reform law is repealed, "Wonkblog" reports ("Wonkblog," Washington Post, 5/15).