Obamacare: A Boon for Insurance Companies


Obamacare is turning out to be a boon for insurance companies. One of the criticisms of the initial rollout of the Affordable Care Act (popularly known as Obamacare) is that, in many states, there were simply not many choices, and the choices that were available did not represent much in the way of savings. However, insurers are now jumping on the bandwagon to offer policies on more state health insurance exchanges in 2015.

Illinois is a good example. For 2014, eight insurers offered 165 different plans. For 2015, that will jump to ten insurers and a whopping 504 plans. A lot of the insurance companies were cautious at first but liked what happened and are now ready to jump in for year two.

One company that sat out in many states was United HealthCare, which has applied for inclusion in the exchanges for Washington State and Illinois in 2015. In 2014, the company only participated in 12 of the exchanges.

Some states, like West Virginia and New Hampshire, only had one insurer providing coverage through the exchanges for 2014. However, in 2015, New Hampshire will see four other insurers join Anthem Blue Cross and Blue Shield in offering coverage. One of these new insurers is Assurant Health, which offers health insurance in New Hampshire but opted not to join the exchange in 2014. After seeing what the exchange could do, it is now ready to join the Affordable Care Act. It is clear to see that Obamacare is a boon for the insurance companies.

Kentucky Health Cooperative is moving into West Virginia, which makes sense as the two states have populations that are quite similar. Most of the people in West Virginia who are still uninsured are rural and under-served in terms of other opportunities as well, and federal subsidies are in place to bring the cost of insurance premiums within reach.

In the long run, this is all good news for the health insurance consumer, according to reports. Especially in the states where only one insurer provided coverage, the range of available policies and prices was smaller than in other states that already offered a wide range of choices. More insurers in the mix mean more options at lower costs and a larger spectrum of options in terms of coverage and deductibles, as well as a larger selection of hospital and physician networks. As the mechanism of the Affordable Care Act keeps working, those networks that were not accepting any plans set up through the act because of fears about payment should begin to start accepting coverage as well.

With each new issuer in a market, premiums go down by 4 percent on average, according to Price Waterhouse Cooper’s Health Research Institute. In 2014, each state exchange had an average of five issuers, but this number is already up to six for 2015.

Obamacare is a boon for insurance companies. For those who are worried about rate increases, those are a definite possibility. According to the Kaiser Family Foundation, the states that are releasing rate proposals for 2015 are showing an average increase of 8 percent. Some states are showing overall rate declines, but others are increasing by more than 10 percent. Overall, the Affordable Care Act is bringing more coverage to more people. However, exactly how “affordable” that care will turn out to be over the long haul is still a valid question. The increase in competition and enrollment appears to be a positive sign for now, though.

By: Rebecca Savastio



Fox Business


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