Companies in this industry underwrite health and medical insurance policies and administer group hospitalization plans, HMOs, and PPOs. Major companies include Aetna, Humana, UnitedHealth Group, and Anthem (all based in the US), as well as AEGON (the Netherlands), Allianz (Germany), and BUPA (UK).
Worldwide, demand for private health insurance is rising, especially in developing countries such as India and China, but also in countries with comprehensive government-provided health care. Private health insurance expenditures exceed $1 trillion annually, according to Swiss Re.
The US health insurance industry includes about 4,700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of more than $500 billion.
Demand for health insurance products is driven by cost of medical care. The profitability of individual companies depends on efficient operations and the ability to enter favorable contracts with health care providers. Large companies and organizations have advantages in negotiating contracts with providers. Small companies can compete successfully by specializing in types of coverage or populations. The US industry is concentrated: the 50 largest companies generate about 75 percent of revenue.
The Affordable Care Act (ACA) has altered the competitive landscape for health insurance companies. The ACA calls for health care coverage to be available for all Americans beginning in 2014; the law also eliminates some common exclusions, such as pre-existing conditions. Managed care companies compete for customers in new government-run health exchanges, where small companies and individuals can buy health care...