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Health insurers’ business is booming, White House says

(Story updated at 2:47 p.m. ET)

The White House on Wednesday said health insurers have reaped greater profits since the Affordable Care Act was implemented, despite initial stumbles on the public exchanges.

Individual market premium increases, government-funded tax credits and Medicaid expansion have been a boon to health insurers’ bottom lines, the White House Council of Economic Advisors said in the report, which serves to undermine some lawmakers’ push to secure funding for cost-sharing reduction subsidies and a reinsurance program to prevent further premium hikes on the ACA exchanges next year.

Congress must pass an omnibus spending bill by Friday to avert a government shutdown. The House dropped a measure to fund the cost-sharing reductions for three years and authorize a $30 billion reinsurance from the spending bill earlier this week. Lawmakers Sen. Susan Collins (R-Maine) and Sen. Lamar Alexander (R-Tenn.) are still working to pass a market stabilization measure but chances are slim.

The White House report noted that while some large insurers have exited the individual and small group markets, the plans that remain have raised premiums to account for ACA regulations and older, sicker patients. Those premiums increases have been covered by federal premium subsidies, which go to 85% of exchange enrollees, it said.

“Stable year-over-year enrollment, despite large premium increases suggests a distorted market that involves large transfers from taxpayers to insurers,” the report stated.

Meanwhile, insurers that have exited the individual market because of financial losses have increased their revenues in the Medicare and Medicaid markets, the report said.

The White House said insurers’ stock prices rose 272% from January 2014 to 2018, outperforming the SP 500 index since Jan. 1, 2014, by 106%, and with the recent corporate tax reform, insurers are set to become even more profitable.

America’s Health Insurance Plans, the insurance industry’s dominant lobbying group, commented that health insurers’ profit margins for commercial plans hover in the low- to mid-single digits, and they record even lower margins for Medicare Advantage and Medicaid plans.

“The fact that it has taken so long to achieve some level of profitability speaks to the challenges that have long existed in the individual market,” an AHIP spokeswoman said in response to the White House report.

The report isn’t revelatory. Many health reform experts have said the ACA exchanges are becoming more stable with each passing year, despite the Trump administration’s efforts to undercut the exchanges. While some major insurers, including UnitedHealth, Aetna and Humana, exited or scaled back their participation in the individual market, others such as Centene Corp. and Oscar Health have expanded their footprints.

Many regional Blue Cross and Blue Shield health plans are turning a profit or approaching profitably, as the White House noted. Highmark Health, a Blues-affiliated plan in Pittsburgh, this week said it recorded a profit on the ACA individual market for the first time in 2017.

The White House report, however, did not mention the Trump administration’s continued efforts to undermine the ACA, such as slashing the open enrollment period to 45 days, cutting funding for outreach and advertising, and ending the cost-sharing reduction payments that help reduce out-of-pocket costs for low income enrollees. Health insurers last year cited the absence of cost-sharing subsidies and the pervasive uncertainty in the future of the individual market as major reasons they hiked premiums by more than 30% on average, several analyses have shown.

Article source: http://www.modernhealthcare.com/article/20180321/NEWS/180329983

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