A recent article in the Wall Street Journal details the financial sustainability for insurance carriers as it relates to the Affordable Care Act Exchanges (Marketplaces). Journalist Anna Wilde Mathews explains why the insurance companies are under pressure to improve their margins on all of their ACA health plan offerings. For example, a recent analysis of Blue Cross and Blue Shield plans, found that they paid out more for health care in the first three quarters of 2015, than they received in premiums on their Individual plans.
Though the health law has added customers to many insurers' rolls, much of that growth has been unprofitable, reflecting medical costs that have often run ahead of what insurers projected when they set premiums, among other factors.
Also recently in the headlines, CNN Money reported that UnitedHealth expects to lose nearly $1 billion on plans they offer through the Obamacare exchanges.
UnitedHealth, which sat out the first year of Obamacare in 2014, said it is not looking to grow its exchange business. Instead, it has increased prices, eliminated marketing and commissions and withdrawn its top-tier products. In an effort to stem the losses, it is also working more closely with providers and enrollees to manage their illnesses and care.
UnitedHealth warned in November that it might pull out of the Obamacare exchanges altogether in 2017, citing higher-than-expected claims. In particular, it blamed the large number of members signing up outside the open enrollment period who were using a lot of medical services.
Some insurers argue that Americans are waiting until they get sick to sign up and then finding a way to qualify during the so-called special enrollment period, which is traditionally open to those who change jobs, get married or divorced or have a baby. The Obama administration has since said it would tighten the rules for joining Obamacare during this period.
Time will tell if these losses result in higher premiums, higher out-of-pocket costs, or insurance carriers pulling out of the market altogether.