The big Medicare Advantage program issuers should do fine in 2017, and changes in how the Centers for Medicare & Medicaid Services (CMS) develops its own rates and policies could make issuers’ lives easier, according to analysts at Standard & Poor’s Ratings Services.
James Sung and other S&P analysts published a mildly optimistic commentary on the state of the U.S. individual health insurance market Tuesday. Patient Protection and Affordable Care Act (PPACA) changes have caused pricing confusion, but the new rules should make the individual health market more viable, the analysts said.
Today, the analysts say the environment for Medicare Advantage issuers looks good. Issuers complained about the program last week, after CMS announced that it would increase the average 2017 payment to Medicare Advantage plan issuers just 0.8 percent.
In February, CMS had suggested it might increase the average payment by 1.35 percent.
The cut in the increase may sting, but the average payment will still increase slightly, and CMS is giving insurers more information about how it sets program policies and support levels, the S&P analysts say.
“We view [Medicare Advantage] as an increasingly favorable and critical business for health insurers in the medium term,” the analysts say, adding that the program ”remains the largest and most advanced retail market in the country, with 18 million members as of March 2016.”
The S&P analysts also say access to a growing, “sticky” population of aging baby boomers should continue to make the market attractive, in spite of the regulatory and compliance risks issuers face.
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