Rating analysts at S&P gave that assessment today in New York, at a health care sector conference aimed at attendees from the kinds of companies that might lend money to health care companies, buy their stock, or offer reinsurance. S&P’s views on an industry sector or company can affect how much a company pays for finance, and whether the company can get financing.
“The ACA has been quite negative” for many insurers, according Joseph Marinucci, a senior director at S&P. But “balance sheet strength managed to endure.”
High-deductible health plans now cover 40 million to 50 million people, and the high deductibles are encouraging the enrollees to help hold down the cost of care, Marinucci said during one panel discussion at the S&P conference.
Efforts to use narrow provider networks and other strategies may also help the insurers hold down costs, he said.
Many insurers began 2014, the year the ACA public exchange system and many ACA health insurance requirements came to life, with rates that were too low, but big increases in 2016 and 2017 may have now brought prices to about the right level, S&P analysts said.
Marinucci acknowledged that officials in Washington could cause problems in 2018, or even this year, by administering ACA programs, such as the cost-sharing reduction subsidy program, in a reluctant way.
But “there’s awareness about that,” and the insurers S&P rates have tried to price for that kind of uncertainty, Marinucci said.
Big health insurers also show a good understanding of the poor health of many of the people they now cover through individual and family major medical coverage, and they seem to be setting prices high enough to adjust for the individual and family coverage enrollees’ morbidity levels, Marinucci said.
What the Insurers Think
During another panel discussion, featuring top-level executives from big health insurers, the executives seeemed to be cautiously optimistic about how they might do in the individual market in 2018, if officials in Washington let the market continue to operate about how it has this year.
Dr. Rene Lerer, the president of GuideWell Mutual Holding Corp., the parent of Florida Blue, said his companies likes the individual market, including the ACA public exchange plan market. “We’ve been profitable in the ACA from day 1,” Lerer said.
But Lerer said the Trump administration could cause serious problems by changing rules and programs, such as cost-sharing reduction subsidy program payment levels, without giving insurers enough time to adapt.
“Obviously, there is no answer today” about what will happen to the payments, Lerer said.
“We don’t know if we’ll get paid for the CSRs for October,” he added.
Colleen Reitan, president of plan operations at Health Care Service Corp., the parent of the Blue Cross and Blue Shield plans in Illinois, Texas and other states, said the company is hoping the relatively modest individual health rate increases it has proposed for 2018 will be enough.
Last year, “we made the decision to price for all uncertainty,” Reitan said.
The move to price for uncertainty for 2017, including uncertainty about cost-sharing reduction subsidy payments and the individual mandate, should put the company’s prices in a good position for 2018, she said.
— Read S&P Sees ACA Risk Corridors Program Funding Gap on ThinkAdvisor.