Healthcare: The Ever-Growing Industry

April 25th, 2017

As we mentioned in a previous blog, without a mandate for individuals and businesses to obtain or provide coverage, in addition to Medicaid rollbacks, we can expect significantly fewer insured individuals throughout the U.S. Nonetheless, the healthcare industry should continue its significant growth into the future, presenting worthwhile collection opportunities for the ARM industry.

Broadly speaking, the healthcare industry remains a consistent and stoic industry, able to endure virtually any type of problems, which makes it an even more appealing industry to ARM participants and investors alike. This industry grew in the past even during the recession before ACA’s implementation.

Looking more in-depth at the industry, in 2015, the most recent data available, hospitals (32.3% of total healthcare expenditures) made up the biggest segment in the sector, followed by physician and clinical expenditures (19.8%) and prescription drugs (10.1%). Other segments of the industry include, among others, home healthcare, nursing and retirement care, and dental services.

As we discussed in the previously mentioned blog, the ACA shifted the uncompensated care (bad debt) burden from hospitals to health insurers and consumers, many of whom were unable to make up the rising premium and deductible costs. If a bill similar to the AHCA is signed into law by Trump, then the uncompensated costs burden would likely shift back to the hospitals who’ll be forced to cover costs of the anticipated growth in uninsured low-income individuals. Additionally, a bill similar to the AHCA may lead to higher premiums for older individuals, thus, as more and more people need healthcare, the associated costs will go up, coupled with the elimination of protection from high premiums.

Overall, the healthcare industry should continue growing into the future, as it remains a vital aspect and necessity for U.S. residents. It’s reasonable to assume that healthcare opportunities for the ARM industry should persist regardless of what happens with an ACA repeal and replace bill; the only difference being who’s burdened to pay for uncompensated costs. Health insurers payments per enrollee should presumably decrease, which will be offset by increases in hospitals and physicians’ clinics. Lastly, healthcare is a necessity so regardless of the political reforms that may occur, people will continue to utilize its key services and goods.

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