The Patient Protection and Affordable Care Act(ACA) has made many insurers rethink their path to a profitable and sustainable future. The ACA poses numerous hurdles to overcome including maintaining an MLR of 80-85% or more, writing profitable yet affordable products for the individual marketplace, and overcoming a surge of new competition. However, despite these risks, the ACA also provides a wealth of opportunities including tapping into a pool of 41 million uninsured Americans. In order to gauge the current state of the U.S. health insurance industry and its future prospects with regards to the ACA, WNS DecisionPoint(TM) carried out a detailed study of 20 health insurance companies in the U.S., supplemented by expert interviews. This study aimed to gather insights on the financial performance and current maturity of health insurance companies across the entire payor value chain. Based on this study, several key strategies emerged for insurers to maintain and increase profitability in this new landscape: - Educate and simplify insurance for the uninsured and nurture long-time customers to encourage loyalty - Determine lifestyle and disease management program mix based on local customer profiling - Track performance of physicians/doctors, compare medical outcomes and best practices to not only improve care management but encourage performance based risk sharing - Streamline workflows and processes with automation and invest in analytics solutions to improve operating efficiency To find out more about the new opportunities the Affordable Care Act opens up for insurers and how to leverage them, browse our slideshare deck or read the full report at: http://www.wnsdecisionpoint.com/our-insights/reports/detail?48=can-the-u.s.-affordable-care-act-be-more-than-a-burden

1. wnsdecisionpoint.com
Can the U.S. Affordable Care Act
be more than a Burden?
How can ACA be Financially Profitable and Sustainable for Insurers?

2. 1© Copyright 2013 WNS (Holdings) Ltd. All rights reserved1 Wnsdecisionpoint.com
Trends driving the U.S. health insurance industry landscape guided by
shift in customer behavior
 Medical care is becoming more preventive in nature
– General rise in health consciousness
– High costs associated with medical treatment/care
driving precautionary wellness
 Health insurance is slowly evolving into a B2C industry
– Focus on selling health insurance directly to
individuals rather than reaching out to companies
 Emphasis on predicting future health risks accurately
is on the rise
– Enhance profitability by:
□ identifying profitable target markets and groups
□ writing profitable products
1 wnsdecisionpoint.com

3. 2© Copyright 2013 WNS (Holdings) Ltd. All rights reserved2 Wnsdecisionpoint.com
Healthcare Ecosystem post Affordable Care Act
Risk-Mitigation-Opportunity-Implication Matrix – A Snapshot
Affordable Care Act adds to the difficulty by propounding a difficult path
laden with risk of declining margins for health insurers
ACA imposes numerous regulatory
mandates for the U.S. health insurance
industry
WNS DecisionPointTM analyzed several
opportunities and risks arising due to ACA
and suggests mitigation measures and
implications to deal with the revised health
insurance landscape
The Patient Protection and Affordable Care Act, generally
called the Affordable Care Act (ACA), was enacted in
March 2010 since the U.S. had to:
 Reduce overall healthcare cost
 Expand the insured population pool
 Improve advanced care needs
 Reduce bad debts and revive antiquated healthcare
ecosystem
Risk
MLR should be 80%-85%,
else shortfalls have to be
refunded to customers
Premiums should be gender/
pre-existing medical conditions
agnostic, making writing affordable
premiums difficult
Mitigation
measures
Provide preventive care
to people to decrease %
of sick and lower claims
Understand current and future health
trends to minimize impact arising from
related risks
Opportunities Insurers can tap ~41 million uninsured Americans
Implication
Design competitive and profitable products post comprehensive
assessment of underlying risks in specific markets
For a complete view of the Risk-Mitigation-Opportunity-Implication Matrix, please download the full report
Clearing
House
$
Insurance cover
Insurance
cover
$
Tie-ups
$
Approved
claims
Claims
Hospitals
Individual care givers
Pathology Lab and
Diagnostic Centers
ACOs
Treatment /
Care
Medical device
$
Medicinal drugs
$
Medical Device
Manufacturers
Pharmaceuticals
Companies
Change brought in
post Obamacare Act
Uninsured
Population
Insured
Population
Insurance Market
place
 Private Insurer
 State
 Federal
Healthcare Provider
2 wnsdecisionpoint.com

4. 3© Copyright 2013 WNS (Holdings) Ltd. All rights reserved3 Wnsdecisionpoint.com
RoE of top 10 U.S. health insurers deteriorated in 2015 compared to
2009 due to operating inefficiency
Decision Areas Mid-size* Large* Performance
Product
Development
 Limited product innovation  Offer innovative products
and services like
telemedicine
 Conducts interviews with
individuals, doctors and
hospitals to comprehend
product needs
 Limited use of sophisticated
analytics to analyze which
markets to serve, what kind
of products to develop
 Understands individual
customer needs by
leveraging analytics on
claims data
 Use the above insights on
claims data to decide
markets entry and
targeting strategies
Pricing
 Use basic actuarial
forecasting
 Lower premium prices as
administrative expenses are
low
 Predictive modeling using
statistics from Federal
Government, hospitals
and doctors etc
-40
-20
0
20
40
60
UnitedHealth
Group
Incorporated
Anthem, Inc. Aetna Inc. Humana Inc. Cigna Corp. Centene
Corp.
WellCare
Health Plans,
Inc.
Molina
Healthcare,
Inc.
Triple-S
Management
Corporation
Universal
American
Corp
Growth in A&H Premiums Earned (%)
2011 2012 2013 2014 2015
0
25000
50000
Anthem, Inc. Aetna Inc. Humana Inc. Centene Corp. WellCare Health
Plans, Inc.
Molina
Healthcare, Inc.
Total Medical Membership (thousands)
2010 2011 2012 2013 2014 2015
*U.S. health insurers with latest annual revenues greater than $1 billion were classified as ”large” companies, while those with revenues less than $1 billion were classified as “mid-size” ones
# Payor value chain includes product development and pricing, sales and marketing, care management programs, strategic alliances and risk management
For a complete view of the U.S. health insurers’ maturity state across the payor value chain and financial performance, please download the full report
WNS DecisionPointTM conducted a detailed study of 20 health insurance companies in the U.S., supplemented by expert interviews to:
 Gather insights on their financial performance
 Estimate the maturity state of health insurance companies belonging to two tiers* and across the payor value chain#

5. 4© Copyright 2013 WNS (Holdings) Ltd. All rights reserved4 Wnsdecisionpoint.com 4
The current financial scenario demands heath insurers to relook at
their business models
For a detailed view of the recommendations, please download the full report
However, for the U.S. health insurers it is
crucial to outgrow their
traditional roles, become
ineludible partners in
medical care by focusing on
ways to improve care
management and remain
profitable
The question but, is HOW?-0.05
-0.04
-0.03
-0.02
-0.01
0.00
2009 2015
Average Underwriting Profit
Top 10 U.S. health insurers
experienced diminished
operating efficiency and decline
in underwriting profits in 2015
compared to 2009
Attainment of cost efficiency is
imperative in such a scenario
4 wnsdecisionpoint.com

6. 5© Copyright 2013 WNS (Holdings) Ltd. All rights reserved5 Wnsdecisionpoint.com© Copyright 2016 WNS (Holdings) Ltd. All rights reserved
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