Obamacare enrolment begins, but no major gain for Wipro, Cognizant

Trump govt has cut budgets and time for enrolment of the landmark healthcare scheme

IT services companies, which were betting on the enrolment for Obamacare to revive faster growth in healthcare services business in the US, may be disappointed as the Trump administration has cut budgets and time for enrolment of the landmark healthcare programme.

Software service providers such as Wipro, Cognizant, Accenture and BPO companies earn a good portion of their revenues by providing services to health insurance companies and the marketplaces for buying health insurance in the US. These companies were awaiting clarity on the proposed change in legislation of Affordable Care Act (ACA) or Obamacare and some of them felt the pinch as clients delayed in making decisions for new projects.

While Wipro, which counts close to 15 per cent of its revenues from healthcare services, claimed to have lost $120 million on a run-rate basis in the past 12 months; another IT major Accenture saw business being impacted due to delay in decision making.

As the Open Enrollment has begun for 2018 on November 1, the US administration has shortened the duration to 45 days, unlike earlier years, and not given enough publicity resulting in confusion among citizens.

Global analysts largely say "nothing much has changed" despite efforts by the current administration to replace the healthcare legislation and this could mean no major change in business for IT services companies, both Indian and global, at least this year.

"...the shorter enrolment period, discontinuing of some subsidies, and reduced funding for advertising also illustrate that the uncertainty is far from over. Consequently, we do not expect the payer segment of the healthcare market to change a great deal with demand for IT services stable but not driving increased growth," said Peter Bendor-Samuel, chief executive, Everest Group, a global IT research firm.

US President Donald Trump last month pushed for cutting subsidies to insurance companies who in turn offer insurance benefits to the low-income citizens. Trump, who won the elections campaigning to repeal the programme and bring in an alternate plan has failed to deliver a viable one since he came to power. This resulted in confusion among health care companies, insurance firms and technology providers, who were uncertain on how the programme would evolve.

The healthcare business segment consists three major service categories: pharma or life sciences, payer or the health insurance service, and provider or the networks of hospitals and doctors. The payer category has arguably been the most impacted due to uncertainty in concrete plans of the current administration.

"This is a shorter enrollment period than previous years, so it's important to act quickly. If you don't act by December 15, you cannot get 2018 coverage unless you qualify for a Special Enrollment Period. Plans sold during Open Enrollment start January 1, 2018," wrote the US administration in a notification on Healthcare.gov.

The US government has cut the marketing budget for Open Enrollment too. US media has reported that confusion among consumers of health insurance persists and many still do not have clarity on getting financial assistance from the government.

"The result will be smaller volumes for this year. The new opportunities will come from the ability to offer insurance under associations. This means that any large group could pool their efforts to offer insurance to members and across state lines. This is where the business opportunity is for IT service vendors and BPO operations," said Ray Wang, Principal Analyst, Constellation Research.