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To keep costs down, insurers are exercising their right under the Affordable Care Act to insist consumers pay their premiums via automatic bank withdrawal. The Department of Health and Human Services is scrambling to make insurers accept plastic.
June 14 -
Stimulus spending and Obamacare are making health care a viable way for banks to diversify their loan portfolios.
January 25
The overhaul of American health insurance is creating some headaches, and a few opportunities, for commercial bankers.
Senior executives at JPMorgan Chase (JPM) and TD Bank (TD) are preparing to lose some customers as a result of the Affordable Care Act, they said in separate interviews last month. But their banks might find a silver lining in some increased M&A advisory business.
Both banks have businesses banking health care providers, such as hospitals and retirement homes. Now some of those customers are
"We see a lot of consolidation in the businesses," says Greg Braca, head of corporate and specialty banking at TD Bank.
For health care provider customers considering mergers, "it's a one-off strategic conversation with a lot of our health care clients," he adds. "It's a very active time right now."
Doug Petno, the chief executive of JPMorgan's commercial bank, also said he is bracing for more mergers among that subset of his customers.
"I think there's going to be a lot of M&A" among health care providers, he said. "There will be more consolidation."
The health care reform law is having an impact on all types of banks' business customers, as many have to rethink whether and how they provide benefits to their employees. Businesses got a temporary reprieve on July 1, when the Obama administration
Petno, speaking before that delay, said that many of his business customers have yet to fully understand the law's effects on their operations or on their finances.
"There's a lot of uncertainty in the client base," he said. "It comes up in almost every client conversation."