The massive federal law aims to cover millions of uninsured people and will take a major step toward that goal in 2014, when the government starts offering tax credits to help many Americans buy coverage through online exchanges. Those exchanges will act as virtual marketplaces for customers to comparison shop for the right coverage.
PwC estimated in a report released Tuesday that 12 million people will find coverage on these exchanges in 2014 and pay a total of $55 billion in premiums for coverage. It projects that those totals could rise to 29 million people and $205 billion in premiums by 2021.
PwC says most of this money will be new, but some will represent premiums shifted from other parts of the insurance market. For instance, the total may include people who had coverage through their employer but switched to buying a policy on the exchange.
The actual numbers also will depend on how many states decide to expand Medicaid coverage like the overhaul requires. Medicaid is the state and federally funded program that provides coverage for the needy and disabled. The Supreme Court ruled earlier this year that individual states could opt out of this expansion.
Nevertheless, the exchanges and the subsidies will present a "huge market opportunity in health care," said Ceci Connolly, managing director of PwC Health Research Institute.
Private health insurance — offered by companies like UnitedHealth Group Inc. and Aetna Inc. — is the main form of coverage for people under 65 in the United States. Insurers have struggled in recent years to increase their enrollment as companies clamped down on hiring or cut jobs and reduced the number of people covered by their plans.
The overhaul’s exchanges will open the market to customers who earn too much to qualify for Medicaid but not enough to afford private coverage.
"These are the people who’ve been crowded out of the insurance market through the relentless drive to increase premium and pass along higher cost of health care to the consumer," said Sheryl Skolnick, an analyst who covers health insurers for CRT Capital group. She wasn’t involved with the PwC study.
The overhaul will tax health insurers, and it restricts how they set up their coverage. But it also provides what Skolnick called "the last great frontier for health plans to add membership."
"All the bad news (from the law) is pretty obvious, but the good news isn’t, and until it is, it’s not going to be fully reflected in the stock market," she said.