Crediting uncertainty surrounding ACAs implementation, Moodys Investor Services slashed the outlook for U.S. health insurers to negative.
In its new industry outlook, Moodys highlights the importance of demographics enrolling into affordable health care option and unknown circumstances regarding the industry assessment tax that will start this year.
Under the upcoming concerns, Moodys includes individual health exchanges and the commercial group plans to be marketed Jan. 1, 2015. The New York-based ratings agency also mentioned the employer mandate and rate pressures on industry products.
While we've had industry risks from regulatory changes on our radar for a while, the ongoing unstable and evolving environment is a key factor for our outlook change, said Stephen Zaharuk, a Moody's senior vice president and author of the report. The past few months have seen new regulations and announcements that impose operational changes well after product and pricing decisions were finalized.
Moodys predicts in the U.S. Healthcare Insurers: Outlook to Negative from Stable report that net earnings margins will be reduced to 2% and smaller overall membership growth to 1%. In 2013, net earnings and overall members were situated at 3%.
Also, the ratings agency states that enrollment statistics show that only 24% in individual products are aged 18-34, which implicates a larger share of the population of older age and less healthy that could drive up claim costs.
In terms of the tax assessment, Moodys states that the amounts already built into in some insurers premium calculations may still be insufficient to cover their share of the assessment.
While Moodys states larger and more diversified insurers will be better positioned, there will likely be an uneven effect on insurers to address upcoming challenges from the ACA mandate.
Register or login for access to this item and much more
All Employee Benefit News content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access