The impact of the Patient Protection and Affordable Care Act (ACA) on large publicly traded health insurers has been less pronounced than initially anticipated. Many carriers are making a smooth transition into the post-ACA environment, according to a new special report from rating agency A.M. Best.
The 2015 Review & Preview Best’s Special Report, titled Health Care Industry Remains Resilient in a Year of Change, details the challenges that played out as the remaining provisions of landmark health insurance legislation took effect.
Among the major provisions implemented in 2014 was the rollout of health insurance exchanges, the elimination of medical underwriting, the individual mandate, Medicare Advantage reimbursement cuts, expansion of Medicaid eligibility, introduction of the health insurer fee and transitional programs pertaining to reinsurance, risk adjustment and risk corridors.
“Although the impact of these provisions on enrolment was significant – in the group and individual markets – it was less disruptive and negative than some had anticipated,” said A.M. Best in a release. “This can be attributed to the numerous changes made to the law since it originally passed.”
The report said that while commercial group coverage has continued to decline, carriers have seen membership growth across the industry, largely driven by government-funded programs, both managed Medicaid and Medicare Advantage, as well as modest premium growth from supplemental and ancillary accident and health coverages.
In A.M. Best’s opinion, the aggregate earnings from the commercial segment will remain material for insurers but most likely will make up a smaller portion of overall earnings. A.M. Best also said it believes Medicaid will continue to be a material source of revenue for health insurers, but earnings in this segment could be a challenge.
A.M. Best’s rating outlook for the U.S. health segment remains stable; however, as to date insurers have generally managed well throughout the ACA’s implementation.
A.M. Best, ACA, US, Insurance, Risk Management