How American Health Insurance Policy Affects A Swiss Breast Pump Maker

http://ift.tt/1c1jA9o

Back in 2013, the business model for Medela, a Swiss company that makes human milk pumps and accessories changed in the United States, when health insurers were required to pay for breast pumps for customers who choose to pump milk. However, the process has been more complicated than just latching on and extracting money from health insurers.

Medela is the big name in the industry, selling everything from expensive electric hospital-grade pumps to inexpensive ones pumped with your hand. It used to be that new mothers would buy the pump of their choice directly from a baby supply store, but things changed when the Affordable Care Act mandated coverage.

Now the market has two tiers: the less expensive pumps that expectant parents order from medical supply companies, and the more expensive ones that they buy out-of-pocket from their local baby-stuff retailer. No, that isn’t a typo: some people choose to go with more expensive models that their insurer doesn’t cover because of personal preference.

It makes sense that insurers want to keep costs down. While the insurance change means that sales are up for Medela, a source explained to Bloomberg that the pumps that insurance covers tend to be less expensive models, which have a lower profit margin for the company.

Some mothers also say that the pumps their insurance pays for aren’t as effective, and just go ahead and buy a pump out of pocket so they can spend less time attached to a machine. It probably wouldn’t be a good idea for Medela to make long-term business plans based on selling multiple pumps to American moms, though.

Making Billions From the Booming Breast-Pump Market [Bloomberg]

by Laura Northrup via Consumerist