US President Donald Trump’s decision to roll back the Affordable Care Act (ACA), also called Obamacare, could be bad news for the Indian IT sector, mostly serving the payer/insurance segment – at least in the short-term.

This comes after last year’s Brexit, which is likely to affect the industry too.

Over the last five years, top Indian IT companies have said technology will play a major role in Obamacare.

Enacted seven years ago, Obamacare expanded health coverage in the US to around 20 million people. Its coverage included setting up marketplaces where consumers could evaluate and select service providers.

It is here that all the major Indian IT companies played a major role in data conversion, creation and management of electronic health records, claims processing and insurance sales.

Healthcare contracts The US is the biggest outsourcing destination with companies like Tata Consultancy Service, Infosys, Cognizant Technology Solutions and Wipro dominating this space.

Two years ago, a report quoting research firm Everest said US healthcare related contracts were expected to more than double to about $68 billion in 2020, from nearly $31 billion two years ago, largely due to Obamacare.

Analysts tracking the IT sector said in e-mail responses to BusinessLine that the impact due to roll-back could be in the short to medium term.

John Caucis, Practice Manager (Public Sector & Health), Technology Business Research, a US-based research firm, said the roll-back is likely to have a greater impact from a payer/insurance segment perspective, as India-based IT competitors all have strong legacies in the BFSI sector.

However, the impact will be less from a provider/hospital perspective, as they have less exposure to the provider/hospital segment in the US.

According to Nitish Mittal, Senior Analyst, Everest Group, impact on the IT-BPO services demand, based on what’s known at this point, is likely to be low in the short term. A complete roll-back is a near impossibility, given the complexities.

The most likely scenario is the repeal of ACA, simultaneous with the enactment of a new law, which will still contain tenets of the ACA.

Spending growth In 2017, Everest Group expects healthcare IT/BPO spending growth to slow down by 100-150 basis points. However, this slowdown is not as sharp as one would expect. Part of the slowdown had already been factored in numbers witnessed last year. Case in point is Cognizant (having over 30 per cent of revenues from healthcare and life sciences), which witnessed sluggishness in its healthcare revenues in 2016. Other players who are likely to be impacted include Accenture, CSC-HP, Wipro, Infosys and TCS, said Mittal.

According to DD Mishra, Research Director, Gartner, the US election changed focus of payer CEOs. With strong campaign promises made by both Trump and incoming Republican majorities in Congress to repeal and replace the ACA, uncertainty is now rife.

Payers find themselves in a similar position as they were before the ACA passed in March 2010, trying to read political tea leaves and determine the impact of possible legislation on new initiatives. “Enterprise IT Spending in Healthcare in US is expected to cross $50 billion by 2019-2020 as per our recent forecast.”

“We need to wait and watch on how it unfolds and to what extent some of the rhetoric are executed on the ground. It is difficult to predict at this stage whether or not the new healthcare law will be old wine in a new bottle and the exact impact on the industry can only be ascertained when further details are available,” Mishra said.