Obamacare's Good For Big Insurers, Most Customers Rate Hikes | The Daily Caller - Liar Liar!
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Obamacare's Good For Big Insurers, Most Customers Rate Hikes | The Daily Caller

Obamacare is looking better than ever for the biggest insurance companies, and they’re prioritizing boosted earnings over expanding Obamacare coverage, according to a memo from Moody’s Investor Service. 

Moody’s is optimistic about insurers’ credit ratings, noting that more insurers are expected to join Obamacare exchanges or offer more plans — and fewer enrollees for each insurer is likely to be beneficial, given early reports that Obamacare customers’ are sicker and costlier to insure than other insurance pools. (RELATED: Obamacare customers could be sicker than the rest of the country) 

“Since the policy-buying population has an unknown medical status and potentially unfavorable risk characteristics, less membership, and therefore less risk, is credit positive,” Moody’s concluded.

And insurers aren’t prioritizing actually expanding health coverage to many more people, according to the report. Large insurers are boosting their premiums after generally losing money or breaking even with their first year of customers, according to the report.

“The premium increases show that insurers have chosen to protect earnings margins rather than push membership growth,” Moody’s wrote.

The continued premium hikes aren’t surprising, according to the memo, as medical costs are still rising post-Obamacare, despite the Obama administration’s promise that it would lower costs. With new Obamacare taxes going into effect every year, many of which will be passed onto consumers, it’s unlikely premiums will be lowered anytime soon.

“The rate increases reflect an increasing medical cost trend that we expect will grow at an annual rate of 5 percent to 6 percent, an increase in the Affordable Care Act industry fee and continued anti-selection owing to regulatory changes that allow individuals to maintain non-compliant plans for another year,” the report found.

The Obama administration’s last-minute ‘administrative fix’ allowed some customers whose insurance plans would have been canceled by Obamacare regulations to keep them for another year, although many states and insurance companies turned down the delay. Widespread insurance cancellations were supposed to drive more, healthier customers to the health care law’s exchanges – but the so-called fix has likely made the Obamacare risk pool even sicker than normal.

Moody’s won’t say for sure whether insurers will end up benefiting from the health care law, however, given a controversial and still in-flux provision of Obamacare.

“We will need to see how the 2014 experience unfolds along with the effect of the ACA risk mitigation programs (reinsurance, risk adjustment and risk corridors) before we can analyze this development,” Moody’s concluded.

The risk provisions are the subject of many last-minute political changes. The Obama administration recently released guidance opening up the possibility that taxpayer funding would be used to make payments to insurance companies to mitigate risk, although the programs were intended to be budget neutral.  Congressional Republicans are arguing that the administration cannot legally make the payments without an appropriation from Congress. (RELATED: House Panel Takes Aim At Obamacare Program That Could Cue $1 Billion Taxpayer ‘Bailout’) 
 

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