Health plans sold on the Obamacare exchanges are still losing money, but most U.S. health insurers are on track for continued strong earnings in 2017 in other segments of their markets.
That was the message from S&P Global Ratings analysts, who spoke on a webinar recently.
Seven of the nine public managed care companies—UnitedHealth Group Inc., Aetna Inc., Humana Inc., Anthem Inc., Cigna Corp., Centene Corp. and WellCare Health Plans Inc.—raised their earnings guidance for 2017, associate director James Sung said.
Following a strong second quarter, “They’re on pace for a very strong earnings year; so strong momentum actually the last few years,” Sung said.
Key to the success of the health insurers is their large group commercial business, but the companies have also benefited from growth in managing plans for the large government health-care programs Medicare and Medicaid.
The importance of government health-care programs is highlighted by the fact that, if administrative fees insurers earn for operating self-insured group plans for companies are excluded, 60 percent of the premiums health insurers collect are linked to Medicare, Medicaid, the Affordable Care Act exchanges and the Federal Employees Health Benefits Program, S&P director Deep Banerjee said.
The individual market, which is the smallest part of the health insurance market, is the most volatile segment, but that is linked to the recent changes made in that market by the ACA, which was enacted in 2010, Banerjee said.
State Blue Cross Blue Shield plans, the largest plans in the ACA exchanges, are likely to continue to stay in the exchanges because the local markets are an important part of their business, Banerjee said.
But companies operating in the exchanges won’t likely show profits on average until 2018, Banerjee said.
But Aug. 11, Anthem Inc., a major Blue Cross Blue Shield company, announced further withdrawals from the 2018 ACA exchanges. The company said it wouldn’t participate in the individual exchange in Virginia “due to a shrinking and deteriorating individual market, as well as continual changes and uncertainty in federal operations, rules and guidance, including cost sharing reduction subsidies and the restoration of taxes on fully insured coverage.”
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