January 23, 2014, 10:24 am
Insurers downgraded on ObamaCare fears
By Jonathan Easley
Moody’s announced Thursday it was downgrading its outlook for health insurers from stable to negative based on uncertainty related to ObamaCare.
The credit rating agency cited an unstable environment because of the healthcare law’s difficult rollout, and projected that insurers would earn two percent less than forecast in 2014.
“While we’ve had industry risks from regulatory changes on our radar for a while, the ongoing unstable and evolving environment is a key factor for our outlook change,” Moody’s Senior Vice President Stephen Zaharuk said in a statement. “The past few months have seen new regulations and announcements that impose operational changes well after product and pricing decisions were finalized.”
The Moody’s report also cites the slow enrollment of young people into ObamaCare as a reason for the downgrade.
“Uncertainty over the demographics of those enrolling in individual products through the exchanges is a key factor in Moody’s outlook change,” the ratings agency said.
Citing statistics released by the administration, it noted that so far about 24 percent of enrollees are between the ages of 18 and 34, while a target of 40 percent may be necessary to keep premiums from rising in the future.
It said the 24 percent of young people enrolled so far is “well short” of the 40 percent target.
Moody’s also said it was worried that insurers’ premium calculations may not be enough to cover the industry assessment tax that begins in 2014.
“These changing dynamics will have an uneven effect on insurers, as the impact of these factors will vary by market segment and geography,” it said. “Moody’s view continues to be that the larger and more diversified insurers will be better positioned, both financially and strategically, to meet the challenges facing the sector.”
The Obama administration has implemented a string of unilateral changes and delays to the healthcare law that has drawn complaints from insurers.
The administration is allowing insurers to continue offering bare-bones plans to those who had them previously in an attempt to quell the bipartisan outcry over the president’s broken promise that if you like your plan you can keep it.
The White House has also delayed the premium payments deadline, delayed by one week the sign-up date for coverage beginning Jan. 1, pushed back by six weeks the sign-up date for those seeking coverage by April 1, delayed the second-year enrollment period until after the 2014 elections and extended the enrollment deadline for people with pre-existing conditions.