Rising US health expenditure allowed the industry to grow through the recession
Los Angeles, CA (PRWEB) December 11, 2012
Despite the recession, the Vision Insurance industry has experienced steady growth in the five years to 2012, due to an increase in total US healthcare expenditure. Healthcare expenditure has been rising due to consistent increases in the cost of healthcare, which have forced vision insurers to raise premium prices on members. As a result, IBISWorld expects industry revenue to increase at an annualized rate of 2.8% over the five years to 2012 to $29.7 billion. “Drops in per capita disposable income and the total number of US employees have pushed growth below prerecession levels,” says IBISWorld industry analyst Eben Jose. “Furthermore, tighter government regulations regarding vision insurance have further threatened revenue and profit margins.” Combined, these factors have dragged revenue down, leading to an expected increase of only 2.9% in 2012.
In the five years to 2012, US healthcare expenditure is expected to increase at an annualized rate of 4.1% to $2.8 trillion. Such growth has helped the Vision Insurance industry maintain revenue because vision insurers must raise premiums. However, the recession posed a challenge for industry profitability. As the economy fell into recession and many Americans lost their jobs, they became unable to keep up with rising premiums. As a result, vision insurers had to keep premiums lower than they normally would to avoid losing members, which meant carrying more of the load in terms of patient benefit costs. Vision insurers typically prefer to keep their medical loss ratio between 60.0% and 80.0%; however, this ratio soared during the recession, causing profit margins to decline. “In the five years to 2017, industry profitability will continue to suffer as insurers are forced to deal with tighter government regulations regarding premiums and membership,” adds Jose. The industry exhibits a low level of market share concentration, as major player VSP Vision Care is the only firm holding a significant share of industry revenue. Concentration has increased over the past five years because many consumers viewed vision insurance as an extra cost and, consequently, cut vision coverage to save money. Industry operators have merged or acquired other companies to reduce costs and improve profitability. As national employment rises, however, businesses will attempt to attract and retain candidates by providing benefits, including vision insurance.
Over the next five years, the economic recovery is forecast to benefit vision insurers. The total number of US employees will increase along with per capita disposable income. These factors will lead to higher membership and premiums as vision insurers will no longer have to lower premiums to maintain membership. As a result, industry revenue is projected to increase over the five years to 2017. Additionally, total US healthcare expenditure is anticipated to continue its upward climb, allowing for further increases in premiums and revenue. For more information, visit IBISWorld’s Vision Insurance in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that provide coverage for routine eye exams and other procedures, as well as discounted pricing for eyeglasses and contact lens purchases. Vision insurance is often a rider policy linked to regular health insurance. This report does not include coverage offered through Medicare or Medicaid programs.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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