Dive Brief:
- Moody's is predicting that insurers will see major financial losses due to Obama administration's fixes on several reform law rules, including extending enrollment deadlines, postponing of plan cancellations and moving up the date for the small business exchange.
- According to the investor service, each of these fixes could hurt insurance companies' financial health, as they could have a negative impact on the risk pool for the exchanges; for example, delaying enrollment deadlines means that insurers could lose up to two months of premiums from healthy consumers.
- If the Obama administration decides to delay the individual mandate or extend exchange open enrollment beyond March, it could change the risk level so significantly that insurers might fight to have premium rates change, Moody's say.
Dive Insight:
Changing the rules and making fixes to the way the ACA sifts out may arguably be good public policy, but it's going to make health insurers very nervous indeed. In particular, changes which forces health plans to bear more risk might see plans exit the exchanges entirely. Generally speaking, health insurers are optimistic about the long-term prospects for reform, but the way things are going, 2014 may be a nightmare for the plans.