Two thirds of Obamacare insurers losing money

By Rick Moran


A report from the Commonwealth Fund shows why so many insurance companies are abandoning the Obamacare exchanges. Simply put, they can't make any money. Washington Free Beacon:

Two-thirds of the insurers failed to turn any profits from plans they sold to individuals in 2014, although a majority of those insurers didn't profit in the prior year, either, according to a report from the Commonwealth Fund. One-third of the insurers did succeed in turning a profit.

When researchers analyzed data from the Centers for Medicare and Medicaid Services on insurers' profits, they found that companies underestimated their spending on the new enrollees by 2 percent. Estimating how much the new consumers would cost was a difficult challenge for insurers, because they had to make all kinds of assumptions about how sick or healthy the new customer base would be.

A federal reinsurance program designed to smooth insurer losses helped ease the way for some insurers in the first few years of the Affordable Care Act's exchanges, the authors noted. "One insurer can have a very different experience than another, so to draw accurate conclusions about how insurance companies are faring in the ACA marketplaces it's important to look at their experiences comprehensively," said Mark Hall, the study's lead author and a professor at the Wake Forest University School of Law.

"When we do that it is clear that estimating exactly how much these new enrollees would cost them was a challenge but the reinsurance program protected them from large losses on enrollees with high medical costs," he said.

But that reinsurance program ends next year, leading insurers to recently propose bigger premium increases than during the first few years of the exchanges. One major insurer, UnitedHealthcare, is withdrawing from the exchanges next year, citing too-big losses

The problem is that as the Obamacare program has progressed, new enrollees are sicker than past customers...........Read more