Health Insurers Continue To Grow Under ObamaCare
Although health insurers’ profit margins shrank a little in 2013, enrollment amongst the largest for-profit insurers jumped by eight million over 2012, according to a new analysis by Mark Farrah Associates. The report concludes that “leaders in the health insurance sector have good reason to remain optimistic”.
Although all major insurers succeeded in enrolling members in the new ObamaCare health insurance exchanges, this is still a small fraction of their business.
Mark Farrah Associates divides the insurers’ membership into two categories: “at risk” and “administrative services only” (ASO). “At risk” enrollment grew more than ASO enrollment. The analysis appears to categorize all commercial contracts, Medicare Advantage, Medicaid managed care, and ObamaCare exchange policies as “at risk”. However, the risk borne in these different segments varies significantly (e.g., consider the “bailout” for insurers participating in ObamaCare exchanges). It will be interesting to see how insurers identify the segments in which they have competitive advantage as ObamaCare continues to sink in.
I want to revisit this discussion a year from now after we’ve had time to accumulate some additional claims history. My fear is that the healthiest new enrollees will have bailed out — leaving the least healthy enrollees in the risk pool. An influx of new customers is a good thing! An influx of new “sick” customers isn’t.
I agree, Devon. Enrollment grows, but we don’t know how enrollment will change long-term. I would believe that it is very volatile and can change based on the number of “sick” customers enrolled or healthy who don’t value their coverage because its too comprehensive.
“The report concludes that “leaders in the health insurance sector have good reason to remain optimistic”.”
Well yeah, it isn’t much of a surprise that enrollment grew since coverage is mandated. As far as remaining optimistic based solely on enrollees from ObamaCare is a bit premature.
Devon’s point is critical. We don’t know too much about the number of healthy vs sick people who have signed up so far because of the administration’s lack of transparency, but it’s a safe bet that it is already the case that the healthy are subsidizing the sick.
I think that is what they are desperately hoping for.
If not then the policy will not be stable on its own and pay for itself. The over reliance on the healthy to pay for the poor is a major issue with ObamaCare.
““At risk” enrollment grew more than ASO enrollment. The analysis appears to categorize all commercial contracts, Medicare Advantage, Medicaid managed care, and ObamaCare exchange policies as “at risk”.”
No wonder “at risk” enrollment grew more, it contains most of the growth in health plans doesn’t it?
At risk is all of the newly enrolled for the most part. It should account for everyone included in Medicaid expansion and the ObamaCare enrollees, which is the brunt of the newly enrolled.