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A Challenged Environment

August 12, 2016

The passage of the Patient Protection and Affordable Care Act (PPACA) in March 2010 and continued cost pressures may drive a radical reshaping of the healthcare market over the next decade. The market will evolve around the provisions in the legislation as changes to insurance coverage and government reimbursement flow across all healthcare industries. Coupled with a growing focus on care cost containment, this industry evolution will drive toward a system better suited to delivering cost-effective quality care. If the industry fails to evolve to offer more cost-effective care during the next five to 10 years, we believe the risk of government rationing rises.

 

All in, we believe the affordability challenges in the public and private markets will accelerate a shift in focus to real cost control. That said, slowing health spending will not prove a small feat. Just to illustrate the dollar magnitude of the challenge illustrated in current US budget forecasts: The incremental projected national health expenditure growth rate (over and above CBO’s nominal GDP growth rate forecasts) represents a cumulative $2.6 trillion of healthcare spending over the 2011-19 period

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