For-profit insurers will diversify into data market, industry watchdog predicts


Non-profit insurers will soon be the dominating type of insurance company due to competition fostered by the Affordable Care Act, says industry watchdog Wendell Potter. If for-profit insurers want to remain viable in the post-ACA market, the former Cigna exec says they must diversify by operating outside the United States and expanding their business lines.

Within the next five years, Potter expects the smaller, non-profit insurers to gain traction largely because of the health insurance exchange market. "As a result of the exchanges and the transparency they bring to the marketplace, insurers' profit margins will be squeezed under the law," Potter, who is a senior analyst for the Center for Public Integrity, told Managed Care. "In addition to competing on a more even playing field, the not-for-profits are benefiting from the increased information consumers have on the exchanges."

To avoid losing a significant market share, he said for-profit insurers should move away from relying solely on health insurance as income. One step they can take is to develop insurance operations in foreign countries. For example, Cigna launched operations in India in February, the Blue Cross and Blue Shield Association partnered with London-based healthcare group Bupa to create the largest provider network in the world and UnitedHealth paid $4.9 billion to buy Brazil's largest health insurance company, FierceHealthPayer previously reported.

Another step for-profit insurers can take is to expand their business into other forms, including data collection and warehousing.

"A lot of what health insurers will do in the coming years will be data driven. They will be in the health information business because they have enormous amounts of data," Potter said. "They will find new ways to make money by buying other data companies, allowing them to sell data on healthcare costs and quality, for instance."

To learn more:
- read the Managed Care article

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