Expanding Affordable Care Act: A Win-Win Situation for Poor Americans & Firms
Insurance provider Anthem's profits are on a roll, largely due to expansion of its Medicaid members under the President Obama's program for insuring the poor Americans under Affordable Care Act, which is funded by the government. This came amid CEO Joe Swedish's raised earnings forecast to over $ 10 from $ 9.90, for the year 2015.
Its Medicaid membership phenomenally surged from 940,000, or nearly 20 percent, at the end of the second quarter of this year to 5.76 million compared to 4.82 million at the end of June last year. This helped in increasing the Q2 income to $859.1 million from $731.1 million. The revenue rose 8.4 percent in the quarter, to $19.8 billion.
Anthem which operates in 14 states under the Blue Cross and Blue Shield brand has become the largest health insurance company after it laid out a $48 billion plan to purchase fellow insurer Cigna Corp. The insurers are merging in order to gain economies of scale, reduce the overhead expenses and improve technology, which is of utmost importance to monitor patients' health and help find care. The acquisition took place to compete with Aetna (AET) and Humana (HUM), as these announced a merger earlier this month.
The states have the option to expand Medicaid coverage for poor Americans and are doing so to the benefit of the health insurance industry that contracts with the government to provide these health benefits.
However, the benefit on average consumer will depend largely on how it changes an insurer's share of the market.
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