Healthcare Hijinks and the Affordable Care Act

Depending on who you ask, the Affordable Care Act (AKA Obamacare) has been either a total failure or a great success. Regardless of your views, the act has had a profound impact on the largest sector in the US economy. HiddenLevers recently analyzed the state of US healthcare, and this post will summarize potential good, bad and ugly outcomes for US healthcare over the next couple of years.

Affordable for who? — The Good

This year has marked another sharp increase in insurance premiums despite surprisingly muted healthcare cost inflation. Businesses have responded to rising premiums by raising deductibles and in some cases dropping their group insurance plans. The ACA has enabled business to do this by giving employees another way to get insurance. While this form of cost-shifting may impact individuals, it will raise profitability at many US businesses as they are able to drop the costs of healthcare coverage. Healthcare costs may also moderate as individuals are more directly exposed to the costs of care. This scenario would likely be positive for US equity markets, while having a negative impact on the healthcare sector due to slower revenue growth.

For The Bad and The Ugly, click here:

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