Hundreds of insurers selling health plans in Affordable Care Act marketplaces are being paid less than 2 percent of nearly $6 billion the government owes them for covering customers last year with unexpectedly high medical expenses.The $96 million that insurers will get is just one-fourth of the sum that provoked an industry outcry a year ago, when federal health officials announced that they had enough money to pay health plans only 12.6 percent of what the law entitles them to receive.
Health insurers get 1.6 percent of $6 billion they are owed for costly ACA customers – The Washington PostDecember 15, 2016
The Department of Health and Human Services (HHS) finally released the 2015 Affordable Care Act (ACA) risk corridor data. The data show the rapid deterioration of the ACA exchanges from 2014 to 2015.
The ACA’s risk corridor program was intended to transfer funds from profitable insurers to unprofitable ones for the first three years of the exchanges (2014 to 2016). The program ran a $2.5 billion deficit for the 2014 plan year as far more insurers incurred losses than made profits. In 2015, the deficit increased to more than $5.8 billion—a 132% increase.
With Republicans holding the House, the Senate, and the Presidency, healthcare stocks are collapsing this morning on the “worst possible outcome” of the election and the implicit looming end of Obamacare.
How some Blues made Obamacare work while others failed – Modern Healthcare Modern Healthcare business news, research, data and eventsOctober 16, 2016
The 34 Blues plans cumulatively had an underwriting loss of $1.36 billion in the ACA’s individual market in 2015, which amounted to a negative 5.8% margin. But performance varied widely by state. For next year some insurers are asking for and receiving double-digit premiums hikes, a fact that has dominated media accounts of ACA exchanges’ performance.
UnitedHealth expects to lose $850 million on Obamacare in 2016, while Aetna, Anthem, and Humana are all on track to lose at least $300 million each on their ACA plans this year, according to company reports and estimates from Bloomberg Intelligence. UnitedHealth says it’s quitting 31 of the 34 states where it sells ACA policies. Humana is exiting 8 of 19 states and reducing its presence to just 156 counties, from 1,351 a year ago. Anthem hasn’t announced plans to change its participation in the program.
On Aug. 15, Aetna said it will stop selling Obamacare plans in 11 of the 15 states where it had participated in the program, reversing its plan to expand into five new state exchanges in 2017. “The exchanges are a mess as they exist today,” says Aetna Chief Executive Officer Mark Bertolini. “They’re losing a lot of money for a lot of people.”
And it is because of those losses that we are seeing what looks more than a little like the start of a health insurance death spiral in the exchanges. This is far from certain, and will depend in significant part on the results of the next open enrollment period, which starts later this year, as well as the decisions made by other health insurers under the law. But there are a number of warning signals to be watching.
We know what a health insurance death spiral looks like because we’ve seen them before, in states such as New York, New Jersey, and Washington. The experience in those states varied somewhat, but they all shared several essential qualities: The states put in place regulations requiring health insurers to sell to all comers (guaranteed issue), and strictly limiting the ways that insurance could be priced based on individual health history such as preexisting conditions (community rating). As a result, insurers ended up with large numbers of very sick customers who were very expensive to cover. Because they were subject to limits on how they could price health history, they responded by signficantly raising premiums for everyone. The new, higher premiums caused the healthiest, most price sensitive people to drop coverage entirely, which caused insurers to raise premiums further, resulting in yet more individuals dropping coverage, and so on and so forth, until all that remained was very small group of very sick, very expensive individuals.
How Has the Affordable Care Act Affected Health Insurers’ Financial Performance? – The Commonwealth FundAugust 17, 2016
Exhibit 1 compares insurers’ projected per-member-per-month (pmpm) medical expenses with actual medical claims for ACA-compliant individual coverage in 2014.10 Across the market, medical claims were 5.7 percent higher than projected ($429 vs. $406 pmpm). Some insurers did considerably worse than others. The quartile of insurers with the highest claims (75th percentile) underestimated their claims by an average of 35 percent, whereas the lowest-claim quartile projected their claims much more accurately, within 4 percent, on average, similar to the average claims underestimate of 6 percent marketwide.