Insurers May Prove Choosy With Exchanges
|By TOM MURPHY, AP Business Writer|
The leader of the nation's largest health insurer warned Thursday not to assume widespread participation from his company in part of health care overhaul's coverage expansion that unfolds later this year.
"We will only participate in exchanges that we assess to be fair, commercially sustainable and provide a reasonable return on the capital they will require," he said.
These exchanges are expected to start accepting enrollment this fall for coverage that begins in 2014. Customers will use the websites, which will vary by state, to compare policies and apply income-based tax credits toward their bills. Many details on the exchanges have yet to be worked out, so Hemsley said the company hasn't made any specific decisions.
But he estimated that
"In a perfect world, we would participate in them all," he said, adding that the insurer will keep evaluating exchanges and could eventually join more.
These exchanges will target individuals and people who have coverage through small employers. The consulting firm PricewaterhouseCoopers has estimated that they will generate
But insurers will have to spend money to make that money. The overhaul will impose taxes and fees on insurers, and it introduces some restrictions on how they can set premiums or the price of coverage.
Insurers, who are not required to participate in the exchanges, also will have to design plans that fit the requirements for each state exchange and build networks of health care providers.
"There is a significant risk ... that if the economics on the exchanges are not favorable, they're simply not going to participate," said
That could affect the premiums people pay for coverage. Proponents of the overhaul say the exchanges will help restrain premium hikes because insurers will be competing against each other as customers compare several policies side by side to find the best match.
Whether insurers ultimately leave some exchanges thin on competition remains to be seen.
He noted that some companies will lose business to the exchanges, so they will need to be on them to recapture it and gain new customers. He also noted that government officials will want credible companies like
"I think regulators are aware of that, so they'll want to offer rules and terms that are attractive enough to attract a robust participation," he said.
Hemsley spoke to analysts Thursday morning after
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