ObamaCare insurers’ losses grew in 2015, study finds

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Insurers’ losses on the ObamaCare marketplaces increased in 2015, but the market is still expected to remain viable, according to a new study. 

{mosads}The study from McKinsey & Company finds that in 2014, insurers had a margin of minus-4.8 percent, translating to an overall loss of $2.7 billion on the individual health insurance market, which includes ObamaCare’s marketplaces. 

The study finds those losses roughly doubled in 2015 to between minus-9 and -11 percent margins, based on preliminary data. 

Many insurers have been complaining about their losses on the ObamaCare marketplaces and are pushing for policy changes. Premium increases are expected to be higher for next year than in previous years, which is likely to become an election issue. 

Still, the study finds that not all insurers lost money. In 45 states, there was at least one profitable insurer in the market in 2014, and 30 percent of insurers nationwide were profitable. 

Furthermore, the study finds that ObamaCare’s financial assistance for consumers will help shield them from the effects of premium increases and avoid a “death spiral” in the market.

“The individual market has little risk of entering a classic insurance ‘death spiral’ as long as the federal government continues to offer subsidies,” the study states, adding that “there will likely continue to be a large, viable individual market.”

The Obama administration focused on this finding of viability, and that at least some insurers in 45 states were making money, which it said shows there is a path for insurers to be profitable on the ObamaCare marketplaces. 

“This report confirms two important lessons that we’ve learned from recent experience: health insurance companies can be and frequently are profitable and the Marketplace is here to stay,” Department of Health and Human Services (HHS) spokesman Ben Wakana said in a statement. 

The HHS has portrayed high-profile market exits, like that of United Healthcare, as part of the natural process of insurers coming and going in a market as it adapts. 

“Some issuers have already figured out how to succeed in the Marketplace, and they’re growing,” Wakana said. “Others will learn to adapt or else lose market share to those who already have. That’s the way a healthy market works. Consumers win either way because they can vote with their feet by shopping around to find the best plan.” 

The study finds that, overall, insurers of many different types lost money in 2014, including national companies, Blue Cross Blue Shield plans and even Medicaid carriers, which are thought to have more experience dealing with the type of enrollees who sign up under ObamaCare. 

The study also points to a possible trend toward fewer doctor options for patients, as insurers that covered a narrower network of doctors were better able to control costs and lost less money. 


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