NEW YORK, March 11 U.S. health insurers are struggling to set prices for their Obamacare plans in 2015 and decide which regions to return to before the deadlines for submitting those plans to regulators.
Some insurers already expect to lose money this year following the rocky launch of President Barack Obama's Affordable Care Act, which aims to provide coverage to millions of uninsured Americans with the help of government subsidies. The rollout was marred by technical errors that held up early enrollment, last-minute regulatory changes and steady political opposition from Republicans.
For 2015, insurers must describe their health plans and proposed rates to state and federal regulators starting in April and May. But before they do, some of the most important factors that go into those decisions may not be known, from the size of the doctor and hospital networks that the federal government will approve to final 2014 enrollment figures and the relative health of their new plan holders.
Without that data, said Jon Urbanek, senior vice president of commercial markets at Florida's market-leading Blue Cross Blue Shield, "I can't tell you exactly yet that we've decided about counties and products and all those pieces, but we feel like participating in the marketplaces is very consistent with our mission."
Cigna Corp Chief Executive Officer David Cordani said the nation's fifth-largest insurer was still undecided on which if any new markets it might enter, although "that decision needs to be made in short order," he said in an interview.
The result, industry executives and experts say, is that some of the larger insurers may pull out of individual markets where they already know they can't make money. Otherwise they will try to hold steady until 2016, when the number of people on Obamacare plans is expected to surge as high as 22 million.
Some smaller insurers offering health plans in 2014 may back out altogether if they can't afford to ride out the program's early troubles.
"There will be some sort of a shakeout," said Tim Jost, a health law expert and professor at Washington and Lee University in Virginia. Small health plans and cooperatives that priced their health coverage too high and got few customers are among the most vulnerable, he said.
"On the other hand, (the national insurers) have been watching the markets, and if 2014 turns out to look better than expected, they may jump in," Jost said.
John Morrison, who founded The National Alliance of State Health CO-OPs, a trade group, was more optimistic about the small insurers. He said the coops have low overhead and are required to keep enough capital on hand to last them into at least the second or third year of the exchanges. They will all be open, he believes, and enrolling new customers in 2015.
PRICE, POLICY SURPRISES
A handful of large insurers have won most of the customers so far among more than 100 active on the Obamacare marketplaces in the 50 states. By their own estimates, WellPoint, Aetna Inc, Humana Inc, and Health Net together pulled in about 970,000 enrollment applications by the end of January out of about 3 million nationwide at that time.
But large insurers including Cigna and Aetna said they do not expect to make money this year on the new Obamacare exchanges.
In January, Aetna Chief Executive Officer Mark Bertolini suggested that the company's participation in 2015 could depend on whether the administration would allow it to raise rates enough to cover expenses.
"Are (rate increases) going to be double-digit, and are we going to get beat up because of the double digit, or are we going to just have to pull out of the program? Those questions can't be answered until we see the population we have today," he said in an interview with cable news channel CNBC.
Health Net said it is breaking even on its exchange customers after hitting targets in Southern California, its largest market. As of early February it had signed up 168,000 people in California and Arizona.
"I feel like we're all in and we are happy we are," Health Net Inc CEO Jay Gellert told investors in January.
Insurers are also bracing for more late policy changes that could disrupt the Obamacare business model. Just last week the administration said it would allow insurers to extend by two more years health policies that were supposed to end in 2014 because they don't comply with the healthcare law.
"We expect consumers will continue to have a robust number of plan choices available to them for the 2015 open enrollment season as insurance companies compete for the business of millions of Americans seeking coverage with the assistance of tax credits," said Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, which oversees the Obamacare marketplaces.
Actuaries, who help insurers calculate what rates to charge, note that the government's most recent guidance to the industry, in the form of a 300-page report released last week, raised new questions on how to predict the Obamacare market in 2015.
For instance, the government said it is still considering what percentage of health insurance premiums paid to insurers must be used to cover medical expenses rather than administrative costs, a decision that could directly impact industry profits.
"Even when something is a final rule it has not meant that it is not subject to further change," said Hans Leida, an actuary at Milliman, referring to the government's regulation of Obamacare. "There is still great uncertainty to come."