U.S. health insurers will have to focus on overseas expansion opportunities if they want continued high rates of growth and profitability, according to a study that explores trends toward an expanded role for private health insurance in other countries.
“U.S. health insurers have been successful at focusing almost exclusively on the U.S. market up until now,” says Sherry Manetta, an analyst at Conning Research & Consulting, which conducted the research. “However, the U.S. now accounts for 80% of the global health insurance market, while representing just 4.6% of the world’s population. Looking forward, both profit pressures at home and higher growth rates overseas will drive increased multinational expansion interest among U.S. health insurers,” Manetta adds.
According to the study, the U.S. health insurance market is forecasted to grow approximately 7% annually from 2009 to 2011. However, “operating margins, which declined to 3.1% in 2008, will continue to be under pressure as proposed health care reform solutions are implemented and health care cost trends continue to outpace general inflation. … Other countries provide opportunities for U.S. insurers to diversify geographically and to leverage the considerable investments already made in health insurance and managed care systems and processes,” researchers note.
Asia and Europe represent the best near-term opportunities for U.S. insurers, according to the report.
“U.S. insurers have built and are managing the world’s most complex managed health care system,” says Stephan Christiansen, director of research at Conning. “With this infrastructure and expertise, U.S. insurers have the potential to emerge as front-runners of a vast global managed health care system, should they decide to enter the competition already underway with Western European and Canadian multinational insurers.”
This story has been reprinted with permission from Employee Benefit News.
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