The Obama administration is quick to call the Affordable Care Act a success, signing up 4 million new consumers through health insurance exchanges, for example. But success for insurers in a post-reform market depends on three main factors.
Young adult enrollment, Medicare Advantage cuts and HealthCare.gov's technical foundation all will impact insurers' performance and ability to succeed during the next few months, reported The Motley Fool. However, as the article pointed out, the ACA's "ultimate fate as a success or failure will require far more than one year to decide for leading health insurers."
Here's a breakdown of three factors influencing insurer success:
1. Young adult enrollment
Enrolling young adults remains crucial for insurers to keep costs down. Although the Obama administration aimed to make young adults about 40 percent of total enrollment, they account for only 24 percent of all sign-ups as of January. Without young adults' vital buy-in, Aetna CEO Mark Bertolini warned that insurers could lose money on overall exchange enrollment this year. Aetna has added 135,000 new members who enrolled through the online marketplaces.
2. Medicare Advantage cuts
Scheduled cuts to Medicare Advantage will dramatically affect insurers participating in the popular program. Payments could decrease by up to 4 percent starting next year to insurers like UnitedHealthcare and Humana, both of which are major players in the Medicare market. Although the Centers for Medicare & Medicaid Services proposed a payout reduction to Medicare Advantage a few days ago, the cuts aren't yet finalized. Medicare Advantage insurers' revenues will take a hit when the cuts take effect, regardless of how large or small the reduction.
3. HealthCare.gov technical foundation
Many industry observers consider the myriad of technical glitches that affected the HealthCare.gov launch in October to have reduced enrollment. If the Obama administration has effectively addressed all issues by the next enrollment period, it will help insurers boost membership, sales and their overall success. Now that CMS has hired Accenture to operate and boost security of HealthCare.gov, all eyes are on the consultant company to see whether it can keep tech problems to a minimum.
To learn more:
- here's The Motley Fool article