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Life Health > Health Insurance > Life Insurance Strategies

S&P says the health insurers it rates look strong

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Analysts at S&P Global Ratings are expecting traditional federal checks and balances to shape efforts to change or replace the Affordable Care Act.

Joseph Marinucci, a senior director at the New York-based rating agency, said Tuesday that he believes Republican opponents of the law will need time to come up with repeal, change or replacement legislation that can get through the Senate.

“Repeal is easy,” Marinucci said in New York at a presentation on S&P’s outlook for the U.S. health insurance sector. “Replace is hard.”

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The Republicans hold 52 seats in the Senate.

Senate traditions normally require supporters of a bill to attract at least 60 votes to get a bill or nomination to the floor of the Senate.

A federal law lets senators get budget measures through the Senate with just 51 votes. The law gives jurisdiction over what can go into a budget measure to the Senate parliamentarian.

James Sung, an associate director at S&P, said he believes those procedural rules will continue to shape the ACA replacement effort. If those rules stay in place, Republicans will need to win some support from Democrats and independents to do anything other than de-fund major ACA spending programs, or change major ACA tax and penalty provisions.

Marinucci predicted that federal policymakers are unlikely to get any ACA overhaul or replacement in place until 2019.

“There’s a lot to this,” Marinucci said.

In recent weeks, President Donald Trump has blasted through traditional restraints on the executive branch, by using a wave of executive orders to  quickly make major policy changes. He has also asked Senate Majority Leader Mitch McConnell to eliminate the Senate tradition that requires supporters of ordinary bills and nominations to round up 60 votes to get the bills and nominations to the Senate floor.

The Trump administration has also shown some signs of questioning whether the federal courts can interfere with implementation of executive orders. West Virginia Attorney General Mark Herring said Sunday that he was looking into allegations that the U.S. Customs and Border Protection might be disregarding a federal court order regarding traveler access to attorneys at Dulles Airport.

Marinucci said he believes the federal laws, regulations and judicial oversight that have affected the implementation of other administrations’ executive orders will also govern the effects of Trump administration executive orders.

Marinucci and Sung said they are more optimistic about the health insurers they rate than about the U.S. health insurance sector as a whole, because the insurers they rate are big, well-capitalized, diversified companies.

Sung and Marinucci said factors that could hurt the U.S. health insurance sector could include an economic slump or “unthoughtful” ACA repeal-and-replace efforts.

ACA change efforts could make S&P analysts less positive sector if policymakers use cuts in Medicare support to pay for other changes, or if policymakers hurt insurers’ group health operations, Sung said.


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