By Melanie Evans
ModernHealthcare.com
January 4, 2011

Health insurers’ outlook continues to be negative as the sector faces new regulations, heightened political pressure and a weak economy, which are expected to squeeze earnings, one major ratings agency said.

Moody’s Investors Service said in a report that insurance provisions of the Patient Protection and Affordable Care Act that go into effect this year could limit insurers’ income. Analysts described 2011 “as a transition year” for insurers as companies grapple with new medical-loss ratio regulations, which require 85% of large group premiums and 80% of small group and individual premiums to be spent on patient care.

Flat Medicare Advantage reimbursement levels for 2011, to be followed by cuts next year, could squeeze insurers’ margins, the report said. Insurers have moved to diversify to increase revenue and income not affected by changes under the reform law, analysts said. The sector also faces greater oversight and political pressure regarding insurers’ premium increases.

Insurers also face threats to enrollment from the economy, according to the report. The weak job market and possible further layoffs in the public sector this year could leave more households without employment, the source of health insurance for many, the report said. Struggling employers and households may not be willing or able to pay for care even as providers seek pay increases to increase revenue.

http://www.modernhealthcare.com/article/20110104/NEWS/301049965/-1#

And…

US Healthcare Insurers: Outlook Remains Negative

Moody’s Investor Service
December 29, 2010

…Despite better than expected results in 2010, Moody’s has maintained its negative outlook for the U.S. healthcare insurance sector due to regulatory, political, and economic threats that combine to place downward pressure on future earnings. Our expectations for 2011 for the sector as a whole include lower earnings, flat-to-low membership growth, and strategies increasingly focused on diversification. The negative sector outlook represents our view of credit conditions facing health insurers over the next 12 to 18 months; it provides a framework against which to consider issuer-specific ratings and research. 1. Regulatory Issues ¡ The healthcare reform law passed in early 2010, has already imposed a number of challenges for health insurers. During 2010, most changes required insurers to provide additional benefits while allowing them to adjust premiums appropriately. However, in 2011, two key provisions of the law — minimum medical loss ratio (MLR) regulations and changes to Medicare Advantage…

The remainder of this 9 page report can be purchased for $550.00 at this link:
http://moodys.alacra.com/research/moodys-global-credit-research—PBC_129845

Comment: 

By Don McCanne, MD

We hear much about the private health insurance industry from Health and Human Services (HHS) and from America’s Health Insurance Plans (AHIP) and the private insurers themselves. This report is of interest because it provides a perspective on for-profit health insurers from a consulting firm for investors.

Although the regulatory changes that the insurance industry faces as a result of the Patient Protection and Affordable Care Act bring bad news to investors, in a sense this is good news for patients because some of the greed has been squeezed out of the system. Moody’s seems to be an expert on greed since they charge $550.00 for a 9 page report that apparently only tells us what we already knew. (I must confess that I made an exception in not reading the full report that was used as the source of today’s quote since I couldn’t bring myself to pay that fee.)

We could have had better news. The savings that is good news for patients is only minuscule when you consider the much larger amount that we could have saved by changing to a single payer national health program – an improved Medicare for all.

Outlook negative for insurers: Moody’s

By Melanie Evans
ModernHealthcare.com
January 4, 2011

Health insurers’ outlook continues to be negative as the sector faces new regulations, heightened political pressure and a weak economy, which are expected to squeeze earnings, one major ratings agency said.

Moody’s Investors Service said in a report that insurance provisions of the Patient Protection and Affordable Care Act that go into effect this year could limit insurers’ income. Analysts described 2011 “as a transition year” for insurers as companies grapple with new medical-loss ratio regulations, which require 85% of large group premiums and 80% of small group and individual premiums to be spent on patient care.

Flat Medicare Advantage reimbursement levels for 2011, to be followed by cuts next year, could squeeze insurers’ margins, the report said. Insurers have moved to diversify to increase revenue and income not affected by changes under the reform law, analysts said. The sector also faces greater oversight and political pressure regarding insurers’ premium increases.

Insurers also face threats to enrollment from the economy, according to the report. The weak job market and possible further layoffs in the public sector this year could leave more households without employment, the source of health insurance for many, the report said. Struggling employers and households may not be willing or able to pay for care even as providers seek pay increases to increase revenue.

http://www.modernhealthcare.com/article/20110104/NEWS/301049965/-1#

And…

US Healthcare Insurers: Outlook Remains Negative

Moody’s Investor Service
December 29, 2010

…Despite better than expected results in 2010, Moody’s has maintained its negative outlook for the U.S. healthcare insurance sector due to regulatory, political, and economic threats that combine to place downward pressure on future earnings. Our expectations for 2011 for the sector as a whole include lower earnings, flat-to-low membership growth, and strategies increasingly focused on diversification. The negative sector outlook represents our view of credit conditions facing health insurers over the next 12 to 18 months; it provides a framework against which to consider issuer-specific ratings and research. 1. Regulatory Issues ¡ The healthcare reform law passed in early 2010, has already imposed a number of challenges for health insurers. During 2010, most changes required insurers to provide additional benefits while allowing them to adjust premiums appropriately. However, in 2011, two key provisions of the law — minimum medical loss ratio (MLR) regulations and changes to Medicare Advantage…

The remainder of this 9 page report can be purchased for $550.00 at this link:
http://moodys.alacra.com/research/moodys-global-credit-research—PBC_129845

We hear much about the private health insurance industry from Health and Human Services (HHS) and from America’s Health Insurance Plans (AHIP) and the private insurers themselves. This report is of interest because it provides a perspective on for-profit health insurers from a consulting firm for investors.

Although the regulatory changes that the insurance industry faces as a result of the Patient Protection and Affordable Care Act bring bad news to investors, in a sense this is good news for patients because some of the greed has been squeezed out of the system. Moody’s seems to be an expert on greed since they charge $550.00 for a 9 page report that apparently only tells us what we already knew. (I must confess that I made an exception in not reading the full report that was used as the source of today’s quote since I couldn’t bring myself to pay that fee.)

We could have had better news. The savings that is good news for patients is only minuscule when you consider the much larger amount that we could have saved by changing to a single payer national health program – an improved Medicare for all.