Calif. Insurers Buck Trend, Report Profits Selling Exchange Plans
The largest insurers in California were among the few health plans in the country reporting profits from selling policies on the Affordable Care Act's exchanges in 2014, according to federal data, the Los Angeles Times reports.
The data come from the law's "risk corridors" program (Terhune, Los Angeles Times, 12/9).
The risk corridors provision permits federal payments to health insurers to help offset the costs they might incur by enrolling a higher-than-expected number of sick people through the insurance exchanges. The program, which will end after 2016, is meant to help insurers in the early years of establishing premium rates for individual and small-group insurance markets under the ACA (California Healthline, 10/27).
Calif. Insurers Post Profits
According to the Times, most insurers across the country reported losses under the risk corridors program, totaling about $2.87 billion. Meanwhile, insurers posted just $362 million in total profit.
California's three largest insurers accounted for half of the profit reported. Specifically:
- Blue Shield of California, which ranked first in the country for such profits, reported $107 million in profit;
- Kaiser Permanente, which ranked second, reported $66 million in profit; and
- Anthem Blue Cross, which ranked seventh, reported $9 million.
Larry Levitt, a senior vice president at the Kaiser Family Foundation, said that "in parts of the country where things were working smoothly, like California, insurers were making money."
Reasons Behind High Performance
According to the Times, several factors contributed to the three insurers' strong performance under the ACA, including:
- Successful early enrollment; and
- Covered California's decision to require participating insurers to terminate existing individual plans at the end of 2013, which helped create a healthier, more diverse pool of existing and new policyholders.
Meanwhile, some California insurers could have been buoyed by consumers struggling to find doctors in 2014, according to the Times. Such an occurrence cold have lowered medical claims and bolstered insurers' bottom lines (Los Angeles Times, 12/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.