Industry revenue will rise due to an increased number of individuals with access to eye care
New York, NY (PRWEB) September 20, 2014
Consistent premium price increases have led to moderate revenue growth for the Vision Insurance industry in recent years; however, costs have largely kept pace, to the detriment of industry margins. From 2009 to 2014, industry revenue is expected to noticeably increase. Industry operators provide coverage for routine eye exams and other procedures, as well as discounted pricing for eyeglasses, contact lens and refractive surgery. According to IBISWorld Industry Analyst Stephen Hoopes, “While vision insurance is distinct from health insurance, many players provide comprehensive policies that include both health and vision plans, causing health and vision trends to be highly correlated.” Consequently, the Patient Protection and Affordable Care Act (PPACA) is set to impact both industries dramatically, and largely explains the spike in vision insurance revenue expected in 2014.
In addition to regulatory changes, a range of other trends has also benefited industry revenue over the five-year period, including the aging of the domestic population. From 2009 to 2014, the number of adults aged 50 and older is anticipated to increase. This benefits demand for the Vision Insurance industry because, according to the latest available data from The Vision Council, the majority of individuals above the age of 45 wear prescription glasses. Moreover, existing operators have also benefited from prevailing higher barriers to entry, with economies of scale both buoying margins from increased compliance costs and tempering the entrance of new players.
Market share concentration within the Vision Insurance industry is moderate, with the top four firms' share of the market anticipated to make up a significant amount of total industry revenue in 2014. The level of concentration within the industry has increased in recent years though, partially a result of regulatory changes and gains offered by scale. The reforms enacted by the Obama administration in 2010 have been driving mergers and acquisitions in the broader Health and Medical Insurance industry (IBISWorld report 52411b). This trend has, in turn, influenced the Vision Insurance industry, as a number of operators offer comprehensive plans that include both traditional health and vision policies. Examples of these acquisitions include WellPoint's purchase of CareMore Health Group and Amerigroup, and Humana's acquisitions of MD Care and Arcadian Management Services. Economies of scale can be captured in the industry in claims processing, building compliance regimes and designing software systems. As vision benefit expenses continue to rise, mergers and acquisitions become more attractive as a means to buoy profit margins.
Over the five years to 2019, industry revenue is forecast to rise markedly. “The primary causes of this trend are the PPACA and improving macroeconomic variables, which collectively increase the number of individuals with access to eye care,” says Hoopes. For example, the number of Medicare beneficiaries is anticipated to rise from 46.0 million in 2010 to 61.0 million in 2020, according to the latest available data from the Henry J. Kaiser Family Foundation. As a result, Medicare payments to optometrists and ophthalmologists are anticipated to rise in the years ahead. Yet, despite rising revenue, consolidation trends are anticipated to persist, mirroring the broader insurance sector, while margins are forecast to fall.
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.
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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