Hopeful signs for Minnesota health insurers
A series of national reports this month show that individual market insurers through the first three quarters of 2017 were doing a much better job covering claims with premium revenue than in previous years.
The improvement suggests that after years of red ink, carriers could soon see financial results on the horizon ranging from break-even to small profits.
Apparently, the trend is holding true in
What's good for health plans doesn't necessarily feel great for consumers, however, since the business has improved with premium hikes and limits on doctor and hospital choices that have outraged some shoppers.
"Every year, it's taking a step in the right direction," said
The improvement comes in the individual market, a small slice of the health insurance world that has undergone sweeping change with the federal Affordable Care Act (ACA).
In
Among other things, the ACA in 2014 started blocking insurers from denying coverage to individuals based on pre-existing health conditions. The health law also launched new insurance exchanges where individuals can buy coverage, and tap federal subsidies.
Since the changes began, many insurers have posted large financial losses in the individual market and, in some cases, have shut down options, as a result. Even with these problems, "health plans have been profitable overall," noted a report this month from rating agency
If insurers don't make money in the individual market, they might elect to stop competing for the business and focus instead on profitable segments, said
"Insurers don't have to participate in the individual market," Cox said.
This month, the
Similarly, the
At S&P Global Ratings, analysts in a report this month tracked what they called gradual improvement in the individual market in terms of medical loss ratios (MLRs), which is the ratio of medical claims incurred by insurers divided by premiums.
During the first three quarters of 2014, 2015 and 2016, insurers across the country reported MLRs in the aggregate that exceeded 90 percent, according to S&P. At that rate, analysts say, carriers were likely losing money on the business, since the calculation doesn't factor overhead costs.
But through the first three quarters of 2017, the MLR was 79 percent, according to S&P, which means more insurers likely will break even for the year or post small profits after factoring overhead and the typical surge in medical claims for carriers during the fourth quarter.
"After the likely improvement in 2017, we expect more insurers to see positive margins in 2018 and the industry, in aggregate, to report low-single-digit margins," analysts wrote.
In
During an interview with the
Insurers, however, say there's still plenty of reason to be cautious about the outlook.
MLRs through the third quarter don't tell the whole story, since insurers tend to incur more medical claims during the second half of the calendar year, insurers say. That's because people with high-deductible health plans pay a lot of medical bills out-of-pocket during the first half of the year until they hit the maximum out-of-pocket limit. At that point, the bills shift to insurers.
"What you're looking at here is the third quarter, so that's still very preliminary information," said
Individual carriers offered varying degrees of pessimism.
In a prepared statement,
"We're feeling much more confident," Worcester said.
In December, the tax bill passed by
Schowalter said he wasn't sure what impact the lack of a mandate would have on the number of people buying coverage in
But Schowalter said he worried about what could be coming with the rules on association health plans and short-term coverage.
"Those kinds of plans could very easily attract more people away from buying insurance on their own," he said, adding that they "could leave fewer people to pay for really expensive medical bills and almost certainly will add another piece of uncertainty in an already unpredictable environment."
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