With their insurance profits capped, plans are rapidly branching out beyond their traditional business of selling health coverage.† There was a time when U.S. insurers' business was paying claims and putting together networks of physicians and hospitals. Today, they are selling health benefits, developing health information exchange systems and even helping big physician groups bill patients.
In 2012, after the U.S health insurance industry was sweeping with reforms and other changes, health plans were relying on businesses that were once peripheral to drive company profits. Small health care companies that have little or nothing to do with processing claims are being bought by the health plans. Subsidiaries that once barely merited a mention at earnings time are growing into major profit centers.
AdvertisementHealth plans typically operate under single-digit profit margins overall. The Patient Protection and Affordable Care Act requires them to spend at least 80 cents of every premium dollar on patient care, beginning with 2011, or pay rebates to customers the following year.
As the prospect of growing profits in the U.S. market for health insurance dims, the health benefits business abroad is attracting a lot of attention from insurers.