Friday, July 25, 2014

Insurers sound pretty happy about Obamacare

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Insurance companies seem to be doing okay under Obamacare.

If the health-care law fell flat, health insurance companies would likely be the first to panic. Their whole business model, after all, relies on selling health policies.

But right now they seem pretty calm:  Obamacare is largely meeting expectations, two major insurance companies reported in the latest round of earnings calls. They intend to maintain or increase their participation as the health-care law moves forward.

"Despite some initial challenges with the launch of the public exchanges, enrollment has continued to build through the end of the open-enrollment period," said Aetna chief executive Mark Bertolini.

Given the importance of insurers' involvement in the health-care law, here are some other things insurers have told us so far about Obamacare's first open-enrollment period.

1) No surprises so far in the age breakdown of enrollees

The younger the insurance pool, the better: young adults tend to use less health care and, as a result, hold down spending and premiums.

It's good news, then, that the share of younger enrollees met insurers' expectations, even though younger consumers apparently waited until the end of the open-enrollment period to sign up.

"We saw in each day's applications the average age coming down in a meaningful fashion," said WellPoint chief financial officer Wayne DeVeydt.

Aetna's Bertolini, on the other hand, cautioned that it's too early for his company to draw any hard conclusions about exchange enrollees. But, he added, the health status of the population seems to be at a manageable range, based on Aetna's expectations.

2) Premiums won't skyrocket next year

Better-than-expected results forced WellPoint executives to walk back claims that Obamacare will lead to double-digit premium hikes. WellPoint suggested, in fact, that premium hikes in 2015 might be lower than expected due to a younger insurance pool.

Bertolini said Aetna also appears to be in a good pricing environment. In the 17 states his company is involved in, he expects premium changes to range from very low single-digit increases to some double-digit hikes. Bertolini estimated roughly half of those increases are due to sudden regulatory changes imposed by the Obama administration, but he did not speculate on the impact of the insurance pool.

3) A vast majority of people are paying their premiums

The final step to getting health insurance is paying the first premium. And insurers say the vast majority of people signing up on the exchanges are doing just that.

WellPoint projected that 90 percent of people signing up will pay their premiums. Aetna, on the lower end, estimated 80 percent.

Those numbers fall in-line with Health and Human Services Secretary Kathleen Sebelius's previous estimate that 80 to 90 percent of people are paying their first premiums. The estimates also dispute a report from the US House Energy and Commerce Committee that claimed only two-thirds of people signing up for Obamacare paid their premiums as of April 15.

4) Individual health plans are a small part of the insurance market

Even if something went horribly wrong with Obamacare's exchanges, it would only impact a small part of major insurance companies' massive portfolios.

Aetna, for example, reported that individual market customers will only make up about 5 percent of the company's operating revenue in 2014.

And UnitedHealth Group, the nation's largest insurer, participated in few public exchanges this year. (The company, however, said it is looking into expanding its participation next year, after highlighting the high volume of potential customers in the exchanges.)

The small market share isn't surprising. Most Americans obtain health insurance through their employers or public plans like Medicaid and Medicare. It makes sense, then, that the exchanges would make up only a small part of insurance companies' business — even if they're crucial to Obamacare's success.

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