A.M.BestTV: ‘First Monday’: ACA Program Change Hampers Insurers

OLDWICK, N.J.--(BUSINESS WIRE)-- This third of four “First Monday” episodes examines the U.S. health insurance industry, as A.M. Best Senior Financial Analyst Doniella Pliss explores how a budget change that leaves the collectability of risk corridor payments uncertain is impacting U.S. health insurers. Click on http://www.ambest.com/v.asp?v=fmhealth415 to view the video program. The last episode in this series of “First Monday’s” will focus on the industry-wide wave of mergers and acquisitions. “First Monday” is A.M. Best’s monthly program featuring commentary by the company's leading analysts.

The Patient Protection and Affordable Care Act (ACA) tackled potential uncertainties by adding in a trio of risk-spreading mechanisms, one of those being the risk corridors program. The intent of this program is to stabilize pricing should premiums not match outlays; however, this program is under fire in Washington D.C.

Pliss addressed how insurers are dealing with the new parameters and what problems these have created for them. “An insurer offering policies on the exchanges may later incur substantial losses due to high claims costs, if this occurs, the Centers for Medicare & Medicaid Services (CMS) will partially reimburse that insurer for its losses,” said Pliss. “Nevertheless, it is possible that CMS will owe more to companies with high risk corridor scores than it will be able to collect from companies with low risk corridor scores. With this being the case, insurers didn't include risk corridors when they were calculating their rates for 2015. The companies just don’t want to take the risk of pricing low and later not being able to collect the risk corridor payments.”

Recent episodes of A.M.BestTV include:

• ‘First Monday’: U.S. Automobile Insurance Model Transforming: A.M. Best Vice President Richard Attanasio discusses how usage-based data and advances in automobile technologies are driving sweeping changes in the U.S. personal automobile insurance sector: http://www.ambest.com/v.asp?v=fmauto415
• ‘First Monday’: Legacy Variable Annuity Blocks Pressure Insurers: A.M. Best Assistant Vice President Rosemarie Mirabella says legacy variable annuity blocks remain a concern due to rich guarantees and lapse-rate risks: http://www.ambest.com/v.asp?v=fmannuities415
• Insurers Uncover New Opportunity in Old Data: A new report that explores emerging opportunities for insurers by focusing more intently on the data they already have to better identify and service customers and prospects: http://www.ambest.com/v.asp?v=data415.
• Lloyd’s North America President Hank Watkins: Syndicate Consolidation Creates Opportunity: Hank Watkins, president of Lloyd’s North America, explains how consolidation among Lloyd’s syndicates is not a threat to the world’s oldest insurance market: http://www.ambest.com/v.asp?v=watkins315.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best
Lee McDonald, 908-439-2200, ext. 5561
Group Vice President, Publication and News Services
[email protected]

Source: A.M. Best

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