Friday, January 24, 2014
Moody’s Downgrades Health Insurers: ACA Major Component of Downgrade
“New York, January 23, 2014 -- Moody's changed the outlook for US health insurers to negative from stable, as implementation of the Affordable Care Act (ACA) continues to create uncertainty for the industry, says Moody's Investors Service in its new industry outlook "US Healthcare Insurers: Outlook Changed to Negative from Stable."
The ACA—signed into law in March 2010—seeks to increase affordability of health insurance and expand both public and private insurance coverage through a number of mechanisms including exchanges, mandates and subsidies.
"While we've had industry risks from regulatory changes on our radar for a while, the ongoing unstable and evolving environment is a key factor for our outlook change," said Stephen Zaharuk, a Moody's Senior Vice President and author of the report. "The past few months have seen new regulations and announcements that impose operational changes well after product and pricing decisions were finalized."
Uncertainty over the demographics of those enrolling in individual products through the exchanges is a key factor in Moody's outlook change, says the rating agency. Enrollment statistics show that only 24% of enrollees so far are aged 18-34, a critical group in ensuring that lower claim costs subsidize the higher claim costs of less healthy, older individuals. This is well short of the original 40% target based on the proportion of eligible people in this cohort, says Moody's.” - Moody's: Uncertain healthcare landscape leads to negative outlook for US health insurers, Global Credit Research - 23 Jan 2014, moodys.com
Link to the entire report appears below: