Macro forces that will impact the advising business in 2018
The impact of tax reform on the economy, business and individuals will be measured throughout 2018, including as a significant factor in how votes are cast at the November mid-terms.
What has lost some steam as of late is the healthcare debate, but I believe there is a tremendous level of concern as to how healthcare and insurance marketplace reform will resurface and impact various stakeholders.
In the meantime, there are four macro forces that are worth watching. What happens with each of these will shape what happens with the economy — and thus advisers’ business — in 2018.
1) Trump administration legislative priorities. What will be the direction of the administration and Congress with respect to legislative principles? Specifically, how does anyone predict what will happen with healthcare and insurance marketplace reform? Keep in mind, with tax reform there is a perception of regulation rollback and nationalistic trade policies, so American businesses appear bullish on the prospects of a thriving American marketplace in the future. Further, with oversees capital returning to the United States, it is viewed that more capital will be available to invest in businesses (including employees) here in the United States. Therefore, where in the legislative agenda will healthcare and insurance marketplace reform fit and how does it affect the economy?
2) Insurance company action. We have already started to see several companies make very strategic bets based on what they predict the administration’s legislative position will be. For example, we are seeing insurance companies, pharmaceutical and pharmaceutical benefit management companies merge into larger vertically-integrated entities. We have also begun to see mergers between hospital and health systems to build greater capacity. Insurance carriers will continue to exit the individual marketplace. Technology companies entering this space will continue, and probably in a larger, more prominent position. Conclusion to draw on this point: more consolidation and greater scale achieved as a result.
3) State autonomy. There appears to be a shift in insurance marketplace reform to give states greater flexibility to regulate the marketplace. How will they respond to this, how will companies (insurance and employers) respond to this and what will the benefits or outcome be?
4) Monetary policy. Will Federal Reserve interest and monetary policy over 2018 have an impact on the direction of businesses, policy makers and regulators and individuals/employees?
Also see: “Top 25 large-group life insurance companies.”
These are all very heady issues with many variables to consider, but the legislative debate will be shaped by how any change in healthcare policy and insurance marketplace reform will impact employers and employees, or individuals. The more direct question will be: How does this affect the economy?
And, with the midterm elections approaching, the legislative agenda will be geared toward reelecting the incumbent. But in order to get reelected, we have to remember the words made famous by President Bill Clinton’s administration: It is all about the economy, stupid!