The Affordable Care Act is allowing more Americans than ever to receive significant health insurance coverage for the treatment of addictions.

( — December 10, 2015) — The Affordable Care Act is allowing many Americans to get help they sorely need.  However, this had has the effect of growing the market and its profitability, which in turn has had the effect of attracting an ever-growing number of investors.

The Growing Market

Since drug addiction and alcohol abuse are both considered “essential health benefits” under the Affordable Care Act, this has now meant that care of these must be offered under the majority of health insurance plans.

One significant change this has had is that many people who in the past were not eligible for such care, now have it covered by their insurance.  Whereas previously, such people would have to do without such care, find help through charities or trusts, or attempt to pay for support out of pocket, with this now being covered by insurance it makes it accessible to a much larger percentage of the population.

The law also specifies that children are covered by the insurance plan of their parents up to the age of 26.  This means that a large percentage of young adults can now get support for addiction issues without requiring their own insurance plan and all the costs that entails.

The Size of the Market

Although as a percentage of the population, the number of Americans requiring treatment for addiction is fairly stable, the Affordable Care Act has now allowed a much larger number of those to affordably access professional treatment.

Previously those numbers were quite low.  As recently as 2013, out of the 23 million Americans who were diagnosed as needing treatment for drug or alcohol abuse, only approximately 10% of them received treatment at a specialist facility.  The other 90% had to make do with less effective and professional options.  Of course with less support comes a higher percentage of relapse.

So with the Affordable Care Act, as the market size has increased for addiction recovery and support, investment money has flowed into the market.  It is now estimated that the size of the market is $35 billion and growing.

Investors into this growing market have in particular included private equity investors, hedge funds, and investment banks.

Until now the industry has remained divided among a lot of different operators.  The largest operator to date has owned no more than 50 treatment centers.  And each center is relatively small holding up to 150 beds, but generally not more than that.

And at this time there are 14,500 such treatment facilities in the United States, but one immediate goal of the new investors in the market is to consolidate the operators into a more efficient and effective market.

It is their intention that the money invested will help to mature the market and extract the most value for investors, while at the same time ensuring quality of service, and success rates for patients, remains high.