2010 Global Opportunities for U.S. Health Insurers
U.S. health insurance companies have focused almost exclusively on the U.S. market and today have only limited operations outside the U.S. The profitability of the U.S. market is changing, and economic growth is expanding opportunities elsewhere. Conning’s Strategic Study evaluates opportunities for global expansion for U.S. health insurers, with an emphasis on Europe and Asia. The study provides information on public health systems, explores trends toward an expanded role for private health insurance, identifies characteristics of favorable private health insurance markets, and provides a framework to explore strategies and overcome challenges for insurers entering or expanding in new markets.
1. Introduction
2. Executive Summary
3. World Health Overview
Global Total Health Care Expenditures
Private Health Insurance Industry
Types of Public Systems
OECD Private Insurance Classifications: Primary, Duplicate, Complementary, Supplementary
Product Continuum for Private Health Insurance
Similarities Between the U.S. and Other Countries
Summary
4. Health Insurance in the U.S.
U.S. Comparison with Other Countries
U.S. National Health Expenditures
Leading Global Health Insurers
U.S. Products and Market Segments
Government Programs
U.S. Companies’ Global Business
The Business Case for Global Expansion
Risks and Other Considerations
Summary
5. A Framework for Market Evaluation
Infrastructure Characteristics
Demand for Private Health Insurance
Regulation
Economic Factors
Private Health Insurance Fit with Market Needs
Culture and Politics
Summary
6. Health Insurance Markets in Europe
7. Health Insurance Markets in Asia and the Pacific
Significant Opportunities in Asia and the Pacific
Coexistence of Public and Private Health Insurance
Critical Success Factors and Barriers to Growth and Profitability
Country Profiles
Summary
8. Other World Regions
Appendices
Introduction
The world spends more than $5 trillion annually on health care. The U.S. alone accounts for 40% of that amount, despite representing only 4.6% of the world’s population.
U.S. health insurance companies have focused almost exclusively on the U.S. market and today have only limited operations outside the U.S. The sheer size of the U.S. market has made this U.S.-centric strategy a profitable one. In 2007, global private health insurance expenditures, or health benefits paid by commercial (private) health insurers, were nearly $1 trillion, or 20% of the world’s total health care expenditures. Eighty percent of that private health insurance market is in the U.S. Every 1% growth in U.S. private health insurance represents approximately $8 billion of additional premium, far more than the total private health insurance market in all but a handful of other countries today.
The profitability of the U.S. market is changing, and economic growth is expanding opportunities elsewhere. The U.S. health insurance market is forecast to grow approximately 7% annually from 2009 through 2011. However, operating margins, which declined to 3.1% in 2008, will continue to be under pressure as proposed health care reform solutions are implemented and health care cost trends continue to outpace general inflation. The insurance industry may be able to respond effectively, over time, to sustain or grow margins. However, economic growth and other factors elsewhere in the world are driving growth in private health insurance. Other countries provide opportunities for U.S. insurers to diversify geographically and to leverage the considerable investments already made in health insurance and managed care systems and processes.
The purpose of this study is to evaluate opportunities for global expansion for U.S. health insurers, with an emphasis on Europe and Asia. The study provides information on public health systems, explores trends toward an expanded role for private health insurance, identifies characteristics of favorable private health insurance markets, and provides a framework to explore strategies and overcome challenges for insurers entering or expanding in new markets.
For those interested in reading more about the U.S. health insurance market and global acquisitions of health insurance companies, we refer you to the following Conning forecasts, Segment Reports, and Strategic Studies.