Obama’s Healthcare Reform Bill and its Impact on the U.S. Healthcare Markets (Pharmaceuticals, Medical devices and Health insurance)
According to a 2009 study by the World Health Organization, the U.S. healthcare system ranks 37th among the healthcare systems of 200 countries. The U.S. healthcare expenditure is considered to be one of the highest in the world, accounting for 17.5% of its GDP in 2009, as compared to an average of 8% to 9% in countries of the Organization for Economic Co-operation and Development (OECD).
This has been a major factor necessitating healthcare reform, along with increasing healthcare costs and health premium rates, as well as the high number of the uninsured (about 47 million or approximately 16% of the total population).
President Obama signed the health reform into law in March 2010 to improve the quality and efficiency of healthcare, address the inefficiencies of the existing healthcare structure, and to decrease the number of uninsured people in the U.S. The health reform bill outlines several provisions such as universal health coverage, cost containment, increase in insurance market competition, excise tax on medical device manufacturers, and lower drug costs for Medicaid and Medicare. The health reform provisions thus directly impact the U.S. healthcare industry and its stakeholders.
The report forecasts and analyzes the future impact of the health reforms on the U.S. healthcare industry. This covers direct as well as indirect impacts of the provisions on pharmaceutical, medical devices, and health insurance industries. Indirect impact refers to provisions that do not specifically apply to these industries. Each section offers a strategic analysis of the impact of Obama’s health reforms on the U.S. healthcare structure.
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Key questions answered
- What is the structure of U.S. healthcare system and what are the pitfalls within the current system?
- What are the major provisions of the U.S. Healthcare reform?
- How would the provisions of healthcare reforms affect U.S. healthcare industry in near future?
- What will be the drivers and restraints for different stakeholders of the U.S. healthcare industry in the near future?
- What can be the possible business implications for the U.S healthcare industry and its stakeholders such as Pharmaceuticals, Medical device manufacturers and health insurance industry?
- What will be the impact of Healthcare reforms on the U.S. economy?
Powerful Research and analysis
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TABLE OF CONTENTS
1.1 Key take-aways
1.2 Report description
1.4 Research methodology
2 U.S. HEALTHCARE INDUSTRY OVERVIEW
2.1 Overview of healthcare system in U.S.
2.2 Healthcare reforms in the U.S.
2.2.1 Agenda of Obama’s healthcare reforms
2.2.2 Challenges for Obama’s healthcare reforms
2.2.3 Impact of Obama’s healthcare reforms on the healthcare industry
126.96.36.199 Impact on health insurance industry
188.8.131.52 Impact of on pharmaceutical and medical devices industries
184.108.40.206 Empowerment of healthcare consumers and its impact on U.S. economy
3 U.S. HEALTHCARE SYSTEM
3.1 Healthcare structure in the U.S.
3.1.1 Reimbursement and financing
220.127.116.11 Public health insurance
18.104.22.168.3 Other public systems
22.214.171.124 Private health insurance
126.96.36.199.1 Employer-sponsored insurance
188.8.131.52.2 Private non-group insurance (individual market)
184.108.40.206.3 Private group insurance (cooperative)
3.1.2 Regulatory environment
220.127.116.11 Healthcare laws
18.104.22.168 Regulating bodies
22.214.171.124.1 The center for devices and radiological health (CDRH)
126.96.36.199.2 U.S. food and drug administration (FDA)
3.2 Healthcare expenditure
3.2.1 Total healthcare expenditure
3.2.2 Per capita healthcare expenditure
3.2.3 Healthcare budget and health reforms
3.2.4 Obama’s stimulus package for healthcare sector
3.3 Need for healthcare reforms
3.3.1 Rising healthcare costs
3.3.2 Unaffordable health insurance
3.3.3 Uneven health coverage
3.3.4 Lack of quality healthcare
4 OBAMA’S HEALTHCARE REFORMS
4.1 Obama’s proposed strategies for healthcare reforms
4.1.1 Increasing affordability and accessibility of healthcare
4.1.2 Improving public health
4.1.3 Lower healthcare costs
4.1.4 Improving quality of healthcare
4.2 Obama’s initiatives in healthcare
4.2.1 Obama’s healthcare reforms
188.8.131.52 Patient protection and affordable care act, 2009
184.108.40.206 Health care and education reconciliation act 2010
220.127.116.11 Healthcare reforms – implementation timeline
4.2.2 Other health initiatives
18.104.22.168 Children’s health insurance program reauthorization act, 2009 (CHIPRA)
22.214.171.124 American recovery and reinvestment act, 2009
5 IMPACT OF OBAMA’S HEALTH REFORM PROVISIONS ON THE U.S. HEALTHCARE INDUSTRY
5.1 Impact on medical devices industry
5.1.1 Excise tax
5.1.2 Increased FDA compliance
5.1.3 Increased transparency through CER and BAN on sunshine provision
5.1.4 Indirect impacts
5.1.5 Business implications for medical device manufacturers
5.2 Impact on pharmaceutical industry
5.2.1 Excise tax: a potential negative impact
5.2.2 Lower drug prices through medicare and medicaid
5.2.3 Rebates for new formulations of branded drugs
5.2.4 Increase inspection and compliance costs
5.2.5 12-year exclusivity for biologics and new regulatory pathway for biosimilars
5.2.6 Coverage of clinical trial costs
5.2.7 Business implications for pharma/ biotech industry
5.3 Impact on insurance industry
5.3.1 Medical loss ratio (MLR)
5.3.2 Mandatory coverage provisions
126.96.36.199 Guaranteed eligibility
188.8.131.52 BAN on annual and lifetime limits
184.108.40.206 Mandatory preventive care and immunizations without cost sharing
5.3.3 Annual fees and tax implications
5.3.4 Health insurance exchange
5.3.5 Improvement in child coverage
5.3.6 Cost containment provisions
5.3.7 Employer play-or-pay policy
5.3.8 Business implications for insurance industry
5.4 Impact on other stakeholders (beneficiaries and hospitals)
5.4.1 Impact of healthcare reforms on beneficiaries
5.4.2 Impact of healthcare reforms on hospitals
6 ECONOMIC IMPACT OF OBAMA’S HEALTHCARE REFORMS
6.1 Economic impact
LIST OF TABLES
1 Strategies proposed by Obama & state of enactment
2 Impact of healthcare reforms on health coverage (Population in Million)
3 Major enactments in past two decades
4 Distribution of healthcare expenditure 2009 ($Billion)
5 Healthcare reforms spending 2010-2019 (Total - $938 Billion)
6 Healthcare reforms funding ($1,081 Billion)
7 Objectives and provisions of healthcare and education reconciliation act (2010)
8 Timeline for implementation of healthcare reforms
9 Objectives and provisions of CHIPRA, 2009
10 Analysis of healthcare reforms (2010 – 2020)
11 Criteria for asseesment of annual fee on the industry
12 Opportunity analysis for large players
13 Proposed strategies for the medical devices industry
14 Tax rates for top U.S. drug companies (2009)
15 Assessment of annual fee on branded drug manufacturers
16 Expected loss to pharma companies due to health reforms
17 Effective risk exposure for top drug companies
18 Patent expiration of top biologic drugs
19 Medical loss ratio by market segment, (2009)
20 Annual fee on health insurance industry
21 Calculation of share of fee for net premiums written
22 Calculation of share of fee for third party administration agreement
23 Beneficiaries of health reforms and related provisions
LIST OF FIGURES
1 Classification of uninsured population by age (2008)
2 Classification of uninsured population by income (2008)
3 Impact of healthcare reforms on health insurance industry
4 Opportunities and threats for U.S. pharma and medical device industries
5 Holistic impact of health reforms
6 Financing and reimbursements in U.S. health insurance sector
7 Distribution of health coverage
8 U.S. multi-payer healthcare system
9 Actual and projected healthcare spend (2005 – 2019)
10 U.S. health expenditure, per capita per year (2000 – 2008)
11 Healthcare stimulus package (2009)
12 Annual health insurance premium for single and family (1999 – 2009)
13 Proposed measures to increase affordability and accessibility of healthcare coverage
14 Strategies proposed for improving public health
15 Strategies to improve quality of healthcare
16 Benefits of comparative effectiveness reaseach
17 Pharma industry scenario (2010 onwards)
18 Effect of financial burden on the drug manufacturers
19 Post reform consolidation in the biosimilars market
20 Possible strategies for drug manufacturers
21 Provisions of healthcare reforms affecting U.S. health insurance industry
22 Impact of increased MLR on health insurance industry
23 Mandatory coverage provisions and their impact on insurance industry
24 Opportunities and threats of health insurance exchange
25 Cost containment provisions and their impact on insurance industry
26 Change in cost of employer-sponsored coverage (Per Annum)
27 Economic impact of U.S. health reforms
Obama’s Healthcare reform bill and its impact on the U.S. healthcare market
The U.S. healthcare system ranks 37th among the healthcare systems of 200 countries, according a 2009 study by the World Health Organization. The U.S. healthcare expenditure is considered to be one of the highest in the world, accounting for 17.5% of its GDP in 2009, as compared to an average of 8% to 9% in countries of the Organization for Economic Co-operation and Development (OECD). This has been a major factor necessitating healthcare reform, along with increasing healthcare costs and health premium rates, as well as the high number of the uninsured (about 47 million or approximately 16% of the total population).
President Obama signed the “Patient Protection and Affordable Healthcare Act” and “Healthcare and Education Reconciliation Act” in March 2010. In order to implement a self-funded reform, the Obama Administration set forward provisions for cost containment and assessment of annual fees (in the form of excise tax) on drug manufacturers, medical device companies, and the private insurance industry over a period of 2010 to 2019. Successful implementation of the health reforms by 2019 would reduce federal budgetary deficit by $143 billion from about $1.4 trillion in 2009.
The industry-specific provisions of the health reforms are expected to have a mixed impact on drug manufacturers and medical device industry. Evaluating the health reforms from the perspective of changing equation among industry stakeholders, empowerment of consumers in the long run is likely to create a win-win situation for all stakeholders.