Health insurers in 10 states that reported rate filings have the support of Moody's Investors Services to go forward with double-digit rate hikes in 2015.
Moody's analysts said the rate increases reflect an increasing medical cost trend, the Affordable Care Act industry fee and regulatory changes that allow people to keep noncompliant plans for another year, according to a report released Monday, emailed to FierceHealthPayer.
"The premium increases show that insurers have chosen to protect earnings margins rather than push membership growth," the report states.
However, the credit-rating agency noted that next year's rates are not definitive. State regulators must review and approve the proposed changes. The rate filings also are non-binding, so insurers can choose to opt out of the online marketplaces before the next open enrollment period begins in November. Insurers' final approved rates and how they compare to competitors will largely influence exchange participation decisions.
So far, more insurers want to sell plans on the exchanges next year. At least 27 new insurers will offer plans on the marketplaces in 2015. But more insurer competition may drive down premiums, FierceHealthPayer previously reported.
And as the filings suggest, more competition on the exchanges next year also means fewer new members. But that's okay, according to Moody's: With risk pool uncertainty, less membership--and therefore potentially less risk--is credit positive for insurers.
Meanwhile, analysts at Standard & Poor's Financial Services said the credit ratings of health insurers will fare better than providers amid industry changes. Insufficient cash could hurt companies' ability to absorb reduced profit margins under healthcare reform, but most of the health insurers have plenty of cash, LifeHealthPro reported. Insurers have "significant financial resources to weather the storm at existing rating levels," the analysts said.
- read the LifeHealthPro article