Insurers: enrollment blues
Continued high unemployment in 2010 would keep pressure on health insurers to compete for valuable commercial members. In the meantime, health plans will be seeking to stave off certain aspects of healthcare reform, including proposed cuts to Medicare Advantage, observers say.
Analysts are not optimistic about the health insurance sector this year, largely because of uncertainty around health reform and economic factors, including unemployment levels and erosion of rich benefit packages as businesses seek to cut costs.
“We will be looking at how insurance companies have been able to get out of the economic crisis and how their invested assets look right now,” says Eva Sverdlova, senior financial analyst at A.M. Best Co., adding it’s too early to know.
The Medicare Advantage program has been a bright spot for insurers. Since its creation in 2003, some 11 million seniors nationwide have enrolled in these plans. The program accounts for a large part of some insurers’ revenue, yet healthcare reform legislation in Congress seeks to cut federal subsidies to these programs. Reimbursement reductions are already set for these plans in 2010, and tightened rules for the Medicare Advantage private fee-for-service plans starting in 2010 are causing some insurers to exit the market.
These factors “are expected to make the 2010 marketing season more challenging for healthcare insurers as they attempt to retain their current members and convince new seniors to buy into one of their Medicare Advantage plans,” according to Joel Levine and Stephen Zaharuk, senior vice presidents at Moody’s Investors Service, in an industry outlook report. “The threat of additional future cuts as contained in proposed healthcare reform legislation only compounds this issue.”