Obama’s Healthcare Reform Bill and its Impact on the U.S. Healthcare Markets

The U.S. healthcare system ranks 37th among the healthcare systems of 200 countries, according a 2009 study by the World Health Organization. The U.S. healthcare expenditure is considered to be one of the highest in the world, accounting for 17.5% of its GDP in 2009, as compared to an average of 8% to 9% in countries of the Organization for Economic Co-operation and Development (OECD). This has been a major factor necessitating healthcare reform, along with increasing healthcare costs and health premium rates, as well as the high number of the uninsured (about 47 million or approximately 16% of the total population).

President Obama signed the “Patient Protection and Affordable Healthcare Act” and “Healthcare and Education Reconciliation Act” in March 2010. In order to implement a self-funded reform, the Obama Administration set forward provisions for cost containment and assessment of annual fees (in the form of excise tax) on drug manufacturers, medical device companies, and the private insurance industry over a period of 2010 to 2019. Successful implementation of the health reforms by 2019 would reduce federal budgetary deficit by $143 billion from about $1.4 trillion in 2009.

The industry-specific provisions of the health reforms are expected to have a mixed impact on drug manufacturers and medical device industry. Evaluating the health reforms from the perspective of changing equation among industry stakeholders, empowerment of consumers in the long run is likely to create a win-win situation for all stakeholders.