In­sur­ers Mov­ing for­ward with re­form

Modern Healthcare - - SPECIAL REPORT -

Health in­sur­ers in 2012 will con­tinue to fo­cus on com­ply­ing with the many pro­vi­sions of the fed­eral health re­form law af­fect­ing their busi­ness. They will also be keep­ing an eye out for strate­gic ac­qui­si­tions that put them in the best po­si­tion to meet the on­go­ing changes to the health­care sys­tem.

“Re­form is the first thing on ev­ery­one’s agenda,” says Doniella Pliss, se­nior fi­nan­cial an­a­lyst at A.M. Best Co. “As of now, this is the law. They will be ready to be in com­pli­ance.”

Health in­sur­ers will con­tinue to be in­volved on a state level in the de­vel­op­ment of health in­sur­ance ex­changes, which are slated to go online in Jan­uary 2014 un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act. It’s still un­cer­tain that all par­tic­i­pat­ing states will meet this tight time frame. Only about a dozen states have en­acted leg­is­la­tion cre­at­ing the online mar­ket­places where in­di­vid­u­als and small busi­nesses will be able to buy in­sur­ance. In­sur­ers must de­cide well ahead of 2014 whether to par­tic­i­pate in the ex­changes, and states will be­gin cer­ti­fy­ing health plans as early as fall 2012.

In­sur­ers will de­cide whether to par­tic­i­pate in ac­count­able care or­ga­ni­za­tions around the coun­try and ex­per­i­ment with these lo­cal pro­grams in which providers share sav­ings for more co­or­di­nated care.

On the tech­ni­cal side, in­sur­ers face ICD-10 com­pli­ance dead­lines, Pliss says.

Consumer uti­liza­tion of health ser­vices has been down for the past three years, but some health in­sur­ers, in­clud­ing Unit­ed­health Group, the largest in­surer by rev­enue, are pre­dict­ing an in­crease in uti­liza­tion on the outpa- tient side in 2012.

As the baby boomers con­tinue to age, in­sur­ers in the se­nior mar­ket will en­joy higher en­roll­ment, Cit­i­group se­nior an­a­lyst Carl Mc­don­ald says in an in­vestor note. “The Medi­care Ad­van­tage in­dus­try will see a nice bump in the num­ber of se­niors turn­ing 65” this year, Mc­don­ald wrote. “The Cen­sus Bureau es­ti­mates that more than 3.3 mil­lion peo­ple will turn 65 in 2012, up from al­most 2.8 mil­lion peo­ple in 2011, an in­crease of around 560,000 lives.”

Pub­licly traded in­sur­ers will be look­ing for more strate­gic in­vest­ments, in­clud­ing align­ing them­selves more closely with providers, an­a­lysts say.

“The cash the pub­licly traded in­sur­ers have ac­cu­mu­lated is un­prece­dented,” Pliss says. “They are sit­ting on piles of cash. They are will­ing to do deals, but what­ever comes up for sale, val­u­a­tions will go up. And in­sur­ers will have to con­sider cap­i­tal needs for 2014 to meet man­dates of health re­form.”

—Re­becca Ve­sely

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