Health Care Service Corp., a member-owned company based in Chicago, is the parent of Blue Cross and Blue Shield of Illinois and Blue Cross and Blue Shield of Texas. It provides or administers major medical coverage for about 14.6 million people, including 800,000 people with exchange plan coverage.
Dean Unger and other analysts at Moody's also look at three other big, rated insurers in the new report: Anthem Inc., Centene Corp. and Molina Healthcare Inc.
Public investors own stock in those three companies. Because those companies are publicly traded, they post regular reports on their ACA exchange plan programs, and their executives talk about the exchange system in quarterly conference calls with securities analysts.
Molina, a company that provides or administers major medical coverage for a total of 4.7 million people, including 949,000 exchange plan enrollees, continues to have problems with pricing its exchange plan coverage, according to the Moody's analysts.
Anthem has 1 million ACA exchange plan enrollees, but 35 million major medical enrollees overall. Exchange plans make up such a small part of Anthem's business that any losses on the plans are unlikely to have a material effect on Anthem's performance, the Moody's analysts say.
Centene, a company with 12 million major medical enrollees, and 1.1 million exchange plan enrollees, appears to be using its experience in the Medicaid market to develop a successful exchange plan operation, the analysts say.
Health Care Service Corp.. which has received much less media attention that the publicly traded companies, lost money in 2014 and 2015 because of problems with its ACA exchange plans, the analysts note.
The company's performance improved in 2016, with exchange plan losses narrowing.
This year, the Health Care Service Corp. individual major medical business "is actually trending toward a profit, due in large part to the product and network changes implemented," the analysts write.
One risk for all four companies is that the federal government will suddenly stop making the payments due from the ACA cost-sharing reduction subsidy proram, which helps people with income from 138% to 250% of the federal poverty level handle health plan deductibles and coinsurance bills.
Another risk is that the federal government could stop enforcing the ACA individual coverage mandate. Insurers say the mandate protects them from the risk that healthy people will see ACA restrictions on medical underwriting as an invitation to wait until they get sick to pay for health coverage.
Today, however, the government has not been doing much to enforce the mandate, the Moody's analysts write.
The analysts report that only 6.5 million taxpayers paid individual mandate penalties for 2015, while about 13 million received individual mandate exemptions.
Given how relaxed mandate enforcement has been,"we do not believe individual mandate enforcement is likely to change materially," the analysts write.
—-Read Rating Agencies Imagine Gentle ACA Repeal on ThinkAdvisor.
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