Moody’s Gives Positive Credit Outlook to Health Insurers that Requested Double-Digit 2015 Rate Hikes for 2015
Moody’s analysts said the rate increases reflect an increasing medical cost trend, the Affordable Care Act industry fee and regulatory changes that allow people to keep noncompliant plans for another year, according to a report released Monday, emailed to FierceHealthPayer.
“The premium increases show that insurers have chosen to protect earnings margins rather than push membership growth,” the report states. (Source: FierceHealthPayer)
This is scary because it means more of the regulatory cost burdens of Obamacare are likely to be passed directly onto purchasers instead of being absorbed by the companies. Thus, there is no incentive to reduce costs, and the price of health insurance will continue increasing. Subsidies will also increase, and the taxpayer ultimately takes the hit.
“likely to be passed directly onto purchasers instead of being absorbed by the companies.”
SPM, just out of curiosity, what business costs do you know of that companies typically choose not to pass directly onto their customers?
“The premium increases show that insurers have chosen to protect earnings margins rather than push membership growth”
This should not be a surprise to anyone, as all profit-seeking firms have to protect their margins. What Devon rightly points out is that now insurance companies are being forced to sell their product to everyone, even those with expensive pre-existing conditions. Insurers therefore, are going to have to get really creative in how they protect those margins, and the results are not going to be good for anyone.
This is not to knock the insurance companies. Let the government interfere in your particular industry and see how you like it.
100% of them, of course!
The moment that a company doesn’t pass its costs onto its customers, the moment that company will cease to exist.
In the insurance business, it pays to protect margins when you’re not allowed to turn people away. Pushing for additional market share could result in losing money on each enrollee and trying to make up you loses on volume.
It just struck me that the insurers who plan to enter the market in 2015 did not wait because they wanted to let the sick people enroll in 2014 and then pick up the healthy ones.
That is what many are saying but if that were the case we would see small premium hikes, I think.
“The premium increases show that insurers have chosen to protect earnings margins rather than push membership growth,”
Wow that’s a shock. I am not surprised they choose to protect their own earnings rather than try to ensure more individuals. That could be costly.
“..said the rate increases reflect an increasing medical cost trend”
And this trend will grow and grow as long as rates increase and individuals willingness to pay is there.