By Caroline Humer
NEW YORK, March 12 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
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
"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
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
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
"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."