Anthem Inc., the No. 2 U.S. health insurer by membership, said medical spending rose in the second quarter, driven by higher costs from the insurer’s Affordable Care Act plans and Medicaid business.
The shares dropped as much as 4.1 percent, the biggest intraday decline since April 27, and were down 0.5 percent to $136.95 at 9:55 a.m. Anthem said it spent 84.2 cents of every premium dollar on medical care, up from 82.1 cents a year earlier.
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Two scholars at the renowned Brookings Institution, Loren Adler and Paul Ginsburg, have published an analysis finding that “average premiums in the individual market actually dropped significantly upon implementation of the ACA [Affordable Care Act].” This contrasts with a plethora of evidence, including a rigorous 2014 Brookings study, showing that the ACA significantly increased premiums. In this post, I discuss methodological concerns with the Adler and Ginsburg approach as well as evidence that leads most scholars to reach a very different conclusion.
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Anthem Inc. said it is now projecting losses on its Affordable Care Act plans this year, a turnaround for a major insurer that had maintained a relatively optimistic tone about that business.
Anthem said it now believed it would see a “mid-single-digit” operating margin loss on its ACA plans in 2016, due to higher-than-expected medical costs. It expects better results next year, because it is seeking substantial premium increases.
Anthem’s financial performance on ACA plans had previously been a relative bright spot among major insurers, many of which continue to struggle.
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The insurer Cigna is expanding into a few new ObamaCare markets, a countervailing force to some recent high profile exits by insurers.
Cigna, one of the nation’s largest health insurers, said Tuesday that it has filed to offer insurance on the ObamaCare marketplaces next year in Chicago, the Raleigh/Durham area of North Carolina, as well as Northern Virginia and Richmond.
The move comes as some other large insurers have announced they are pulling out of ObamaCare marketplaces because of financial losses. Humana announced last week that it will participate in no more than 11 states next year, down from 19.
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Since Obamacare’s rollout in the fall of 2013, 16 co-ops that launched with money from the federal government have collapsed.
The co-ops, or consumer operated and oriented plans, were started under the Affordable Care Act as a way to boost competition among insurers and expand the number of health insurance companies available to consumers living in rural areas.
Now, just seven co-ops—Wisconsin’s Common Ground Healthcare Cooperative; Maryland’s Evergreen Health Cooperative; Maine Community Health Options; Massachusetts’ Minuteman Health; Montana Health Cooperative; New Mexico Health Connections; and Health Republic Insurance of New Jersey—remain.
Thomas Miller, a resident fellow at the American Enterprise Institute who is an expert in health policy, said each of the seven remaining co-ops have “warning indicators” leading up to when, and if, they fail.
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Thousands of Illinoisans heeded federal law and bought health insurance last year via the state’s Obamacare exchange. They signed up with Land of Lincoln Health, a state-approved insurer. They paid their premiums and deductibles. Many counted on that coverage to manage chronic illnesses or other long-term treatment.
Now, a kick in the teeth: Land of Lincoln has collapsed. Its customers must scramble for new coverage in an upcoming “special enrollment” period. They will have 60 days to find another plan on the Illinois exchange to cover the last three months of the year.
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The big rate increases announced last week for health insurance policies sold by California’s version of the federal health reform are the latest evidence that the Affordable Care Act, despite its name, cannot do much to tame the rise of health care costs.
The government-run health insurance market is facing all the same cost pressures that the private market has confronted for years, plus more that have resulted from the dynamics of the federal law itself.
Covered California, the state insurance agency created to implement the federal law, announced last week that rates for insurance sold through the program will increase an average of 13.2 percent in 2017. The state’s two biggest insurers, Blue Shield and Anthem Inc., will increase rates by 19.9 percent and 17.2 percent, respectively.
Today’s headline in The Los Angeles Times: “California Obamacare rates to rise 13% in 2017, more than three times the increase of the last two years.” The increase will be 17.2% for Anthem and 19.9% for Blue Shield–the largest Obamacare insurers.
Obamacare supporters have long pointed to Covered California as the example of just how good Obamacare could be if the entire program were run as well as it is in California.
Covered California’s average rate increase for 2017 will be 13.2%.
But half of the California market is controlled by two carriers who will be asking for much bigger increases. Blue Shield of California said its average rate increase for 2017 will be 19.9%, the biggest statewide increase. Anthem Blue Cross said it will increase its rates by an average of 17.2% for 2017.
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California’s Obamacare premiums will jump 13.2 percent on average next year, a sharp increase that is likely to reverberate nationwide in an election year.
The Covered California exchange had won plaudits by negotiating 4 percent average rate increases in its first two years. But that feat couldn’t be repeated for 2017, as overall medical costs continue to climb and two federal programs that help insurers with expensive claims are set to expire this year.
The increase announced Tuesday comes as major insurers around the country seek even bigger rate hikes for open enrollment this fall, and the presidential candidates clash over the future of President Barack Obama’s landmark health law.
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Humana will exit eight of the 19 individual health insurance markets where it has sold Obamacare plans this year, the insurer announced Thursday.
The company is still struggling to make a profit on the exchanges, according to its second quarter earnings guidance released Thursday. The company expects to offer individual plans in 156 counties across 11 states compared to the 1,351 counties in 19 states it has offered plans in the year, according to a release.
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