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Exchanges year 2 : New findings and ongoing trends

January 5, 2015 Comments off

Exchanges year 2 : New findings and ongoing trends (PDF)
Source: McKinsey & Company

The open enrollment period (OEP) for year 2 of the individual e xchanges is officially under way, having begun on November 15 th. To understand how the products being offered this year differ from those offered during the 2014 OEP, the McKinsey Center for U.S. Health System Reform expanded its database to include all of the 335 carriers participating on the 2015 exchanges and all of the products they are offering there. This year, we were able to obtain data at a deeper level than we did last year (i.e., we were able to obtain 2014 and 2015 data for each county, not just each rating are a) . Thus , our database contains information on more than 223 ,000 ACA – compliant on – exchange products from both years, including premiums, benefit design, and network design . As a result, we were able to compare year – over – year carrier, product, and premium changes across the market as a whole. In ad dition , for each product offered in 2014 that was re – filed in 2015 , we linked the data from both years so that we could understand the specific changes that 2014 exchange enrollees are seeing during the 2015 OEP.

How the world could better fight obesity

December 2, 2014 Comments off

How the world could better fight obesity
Source: McKinsey & Company

A new McKinsey Global Institute (MGI) discussion paper, Overcoming obesity: An initial economic analysis, seeks to overcome these hurdles by offering an independent view on the components of a potential strategy. MGI has studied 74 interventions (in 18 areas) that are being discussed or piloted somewhere around the world to address obesity, including subsidized school meals for all, calorie and nutrition labeling, restrictions on advertising high-calorie food and drinks, and public-health campaigns. We found sufficient data on 44 of these interventions, in 16 areas.

Although the research offers an initial economic analysis of obesity, our analysis is by no means complete. Rather, we see our work on a potential program to address obesity as the equivalent of the maps used by 16th-century navigators. Some islands were missing and some continents misshapen in these maps, but they were still helpful to the sailors of that era. We are sure that we have missed some interventions and over- or underestimated the impact of others. But we hope that our work will be a useful guide and a starting point for efforts in the years to come, as we and others develop this analysis and gradually compile a more comprehensive evidence base on this topic.

Management: The next 50 years

November 25, 2014 Comments off

Management: The next 50 years
Source: McKinsey & Company

Our 50th anniversary edition examines the future of management, including long-term capitalism, leadership in an era of machine learning, next frontiers for strategists, and global productivity.

A pocket guide to doing business in China

November 7, 2014 Comments off

A pocket guide to doing business in China
Source: McKinsey & Company

China, a $10 trillion economy growing at 7 percent annually, is a never-before-seen force reshaping our global economy. Over the past 30 years, the Chinese government has at times opened the door wide for foreign companies to participate in its domestic economic growth. At other times, it has kept the door firmly closed. While some global leaders, such as automotive original-equipment manufacturers, have turned China into their single largest source of profits, others, especially in the service sectors, have been challenged to capture a meaningful share of revenue or profits.

This article summarizes some of the trends shaping the next phase of China’s economic growth, which industries might benefit the most, and what could potentially go wrong. It also lays out what I believe it takes to build a successful, large-scale, and profitable business in China today as a foreign company.

Understanding India’s economic geography

November 4, 2014 Comments off

Understanding India’s economic geography
Source: McKinsey & Company

India’s rapid growth in the decade to 2012 saw it emerge as one of Asia’s most promising markets. But the recent slowdown made growth and profitability increasingly elusive, forcing companies to think harder about the way they allocate resources. As growth picks up, and rapid shifts in India’s urban and rural economic landscapes occur, marketers will need to make strategic market choices to maximize returns. Understanding the growth drivers and identifying high-potential markets at a granular level are critical priorities for businesses looking to benefit significantly from this returning tide of growth.

Taking into account their existing footprints, product mixes and extensions, and long-term aspirations, companies could consider three approaches to dissect the Indian market and decipher its heterogeneity: states, clusters, and cities. The research underpinning McKinsey’s latest report—India’s economic geography in 2025: States, clusters, and cities—combines a robust understanding of macroeconomic issues at a national level with microlevel insights on the economic and income potential of states, districts, and cities.1 By building a granular view, based on several different economic scenarios, of where growth and market opportunities will emerge, the report shows that businesses can tailor investment decisions to capture a disproportionate share of the pie in India’s ever-changing economic geography.

Our research focuses on distinct geographic slivers of opportunity at each level of granularity.

Tackling the world’s affordable housing challenge

October 27, 2014 Comments off

Tackling the world’s affordable housing challenge
Source: McKinsey & Company

Decent, affordable housing is fundamental to the health and well-being of people and to the smooth functioning of economies. Yet around the world, in developing and advanced economies alike, cities are struggling to meet that need. If current trends in urbanization and income growth persist, by 2025 the number of urban households that live in substandard housing—or are so financially stretched by housing costs that they forego other essentials, such as healthcare—could grow to 440 million, from 330 million. This could mean that the global affordable housing gap would affect one in three urban dwellers, about 1.6 billion people.

A new McKinsey Global Institute (MGI) report, A blueprint for addressing the global affordable housing challenge, defines the affordability gap as the difference between the cost of an acceptable standard housing unit (which varies by location) and what households can afford to pay using no more than 30 percent of income. The analysis draws on MGI’s Cityscope database of 2,400 metropolitan areas, as well as case studies from around the world. It finds that the affordable housing gap now stands at $650 billion a year and that the problem will only grow as urban populations expand: current trends suggest that there could be 106 million more low-income urban households by 2025, for example. To replace today’s inadequate housing and build the additional units needed by 2025 would require $9 trillion to $11 trillion in construction spending alone. With land, the total cost could be $16 trillion. Of this, we estimate that $1 trillion to $3 trillion may have to come from public funding.

However, four approaches used in concert could reduce the cost of affordable housing by 20 to 50 percent and substantially narrow the affordable housing gap by 2025. These largely market-oriented solutions—lowering the cost of land, construction, operations and maintenance, and financing—could make housing affordable for households earning 50 to 80 percent of median income.

A time for stress: The challenges facing Europe’s banks

October 10, 2014 Comments off

A time for stress: The challenges facing Europe’s banks (PDF)
Source: McKinsey & Company

In November the European Central Bank (ECB) will officially take overall responsibility for the supervision of major European banks under the Single Supervisory Mechanism. This is one of the biggest structural changes in the financial-services regulatory environment in the past 30 years. Europe’s banks are facing tough new minimum that they need to make some major changes.

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