Perspectives

In the Media

New Era Crimps Health Insurance Profits

By Harris Meyer, Managed Healthcare Executive

In an interview with Managed Healthcare Executive Magazine, John Stephens, Principal with Bridge Strategy Group, predicts that plan profits will be squeezed by the Patient Protection and Affordable Care Act (PPACA).

Health insurance industry watchers predict that plan profits will be seriously squeezed by the Patient Protection and Affordable Care Act (PPACA). One stock analyst recently announced sell recommendations for all managed care stocks and dropped coverage of the sector because of what he sees as the law's negative effect on profitability.

"We are concerned that market structure changes, profit limitations and rebates, and ever-present political/regulatory pressures will negatively impact future profit growth and more than offset the anticipated influx of newly insured members," wrote Aaron Vaughn, an analyst with the market research firm Edward Jones.

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