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The U.S. Government Brings the Health Insurance Industry 32 Million New Customers

Why the insurers haven't told the Republican members of the House of Representatives to cool it on ACA "repeal" is something I do not understand.

Sarah Kliff:

Investors see health law's potential: SAN FRANCISCO – As Republicans push forward on repealing health reform, planning the law’s demise, a different conversation is happening among thousands of health care investors gathered in San Francisco for this week’s J.P Morgan Health Care Conference: how to capitalize on health reform’s new business opportunities.The Congressional Budget Office estimates 32 million Americans will gain health insurance by 2019 if the law stands. For health insurers, that represents a potential boon for both their individual market business as well as in the Medicaid market, where states regularly contract with private insurers to manage care.... [R]egulations released this year have been relatively industry-friendly, increasing stability, and the health reform’s new business opportunities are beginning to look more tangible....

At the J.P. Morgan Health Care Conference in San Francisco this week, major health insurers outlined the major expansion opportunities they see in the health reform law. Aetna is exploring how to capitalize on the individual market, expected to boom in 2014 when Americans must purchase health insurance or pay a fine. “We have major efforts underway to strategize on how to take advantage of those opportunities,” said the insurer’s CFO, Joseph M. Zubretsky, in a presentation to health investors. “We’re clearly understanding the risks…but with millions coming on to the health exchanges, one needs to not only balance risk but really understand the opportunity for growth that exists in this market place.” “We’ll really be ready for the individual market as it evolves,” Humana CEO Michael McCallister said. “We’re likely to have 51 flavors of this.” In the wake of the health reform law, Humana sees opportunities both in its Medicare and individual market products.

Medicaid also presents serious growth opportunities. The program will expand to cover everyone below 133 percent of the federal poverty line and, as the Wall Street Journal first reported, insurers are actively pursuing contracts with states to manage their Medicaid plans. As Aetna’s Zubretsky put it, “Medicaid is going to be a critical component of our business model with 17 million joining that program.” Molina Healthcare, a company that has a large book of business in Medicaid, listed the millions of Americans who will become newly-eligible for Medicaid as a “health reform growth opportunity” in an investor presentation....

Wellpoint spent much of last year sparring with the Health and Human Services Secretary Kathleen Sebelius over a double-digit rate hike and policy recissions, at one point writing a letter to President Barack Obama accusing the president of spreading “false information.” Speaking on Monday, CEO Angela Braly framed health reform as a collaborative project with the Obama administration. “We’re working collaboratively with the administration and intend to continue to do so,” she said. “We have brought to them input both from our voice and our consumer advisory group, and they give us a lot of feedback. Our job is to work very carefully with the administration and Sebelius to get the answers to our consumers.” For their part, Wellpoint has found the new regulations manageable. While they expect the new medical loss ratio regulations, which require insurers to spend at least 80 percent of premiums on medical costs, to have a negative impact on their business, it won’t be unmanageable. “We’ve sized about a $200 to $300 million headwind taking our existing book of business and overlaying the MLR rules,” Wellpoint CFO Wayne Deveydt said. “We’ll modify commissions paid to brokers… Brokers will continue to be viable but there’s a shared responsibility [for the new regulations].”...

Health insurers spent barely anytime discussing Republicans’ repeal efforts. Aetna’s Zubretsky touched on the subject briefly only to say that Republicans understand that a rifle shot approach to tearing out specific health reform provisions, particularly the individual mandate, would not bode well for their business. “The unintended consequence of repealing and replacing part of the legislation is the biggest risk here,” he said. “If guaranteed issue stays but the enforceable mandate disappears, you need another mechanism to make the costs in the risk pool work.” Zubretsky said Aetna has been in touch with the GOP on the issue and “believe the Republican leaders we’ve been talking to understand the consequences of decoupling the mandate from the guaranteed issue.”