NEW YORK, N.Y., USA: Dental insurance accounts for 9.1 percent of the broader health and medical insurance industry, according to a recently completed IBISWorld Industry report. But there is plenty of room for growth, according to IBISWorld Industry analyst Stephen Hoopes. “An estimated 16 percent of domestic consumers lack medical insurance,” Hoopes said.
“While estimates of the share of consumers lacking dental insurance range from 26 to 42 percent, there exists a drastic difference between the two types of health care coverage,” Hoopes said.
Traditionally, dental insurance has focused more on covering regular maintenance and preventative oral health treatments, while medical insurance emphasizes coverage of unpredictable and urgent health care needs. Consequently, according to the IBISWorld Industry report, dental care costs and industry revenue are typically more stable than medical costs.
During the past five years, a consistent increase in health care expenditure (i.e., medical cost inflation) boosted industry premiums and drove revenue growth. However, lower policy enrollment figures during the recession mitigated the dental insurance industry’s performance during the period.
Rising unemployment during the recession directly damaged industry revenue through declines in group coverage and indirectly through lower per-capita disposable income. Moreover, mounting competition from direct reimbursement and discount dental plans have tempered profit margins in recent years. “Yet, revenue growth is anticipated to (have picked up) a slight 2 percent in 2013, primarily due to increases in workforce figures and disposable income levels,” Hoopes said.
During the five years to 2018, industry revenue is forecast to increase. While the industry will benefit from an improving economic environment and favorable demographic trends, the enactment of health care reform provisions is expected to be the primary driver of growth. While 8.7 million children are anticipated to gain dental benefits under the PPACA, reducing the number of children without dental benefits by 55 percent, only 5.3 million adults are expected to gain coverage under the law.
The dental insurance industry operates with a medium level of market share concentration. The top companies in the industry are MetLife Inc, Delta Dental and Aetna. Industry concentration has increased during the five-year period, with industry firms merging or acquiring other firms to expand, cut costs and improve profitability. Moreover, following the PPACA, consolidation trends in the dental insurance market have mirrored these trends in the broader health and medical insurance industry, according to the IBISWorld report (No. 52411b).
(Source: IBISWorld)
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