A.M. Best Briefing: U.S. Health Exchange Players: Growing Membership, Questionable Earnings

OLDWICK, N.J.--()--The rollout of the U.S. health insurance exchanges and related technological issues required health insurers to deploy additional customer service staff to assist new and potential enrollees. Although the time period was extended for applicants to request coverage, enrollment from the exchanges was lower than initial government projections in the initial and second open enrollment periods.

According to the latest Best’s Briefing, titled, “U.S. Health Exchange Players: Growing Membership, Questionable Earnings,” the individual market was expected to completely transform in 2014, with the anticipated cancellation of all plans that were non- Patient Protection and Affordable Care Act (ACA) compliant legacy plans. While individual commercial enrollment surged, the overall impact of the ACA implementation in 2014 was less negative than initially anticipated due to delays in the implementation of certain key provisions, enhanced government transitional risk payments and multiple changes to the products and networks the health insurance carriers introduced.

The following are some of the highlights in this latest briefing:

  • For exchange participants, individual enrollment now accounts for 31.4% of all commercial enrollment compared with 10.9% in 2005. Similarly, individual enrollment accounted for 6.8% of total enrollment in 2005, doubling to 13.3% at year-end 2014. Conversely, non-federal exchange companies’ individual enrollment as a percent of total commercial enrollment has increased to 15.3% in 2014 from 5.9% in 2005. However, individual enrollment is still a very modest 2.6% of total enrollment for those companies that did not enter the federal exchanges;
  • Individual commercial premiums written follow a similar trend for the individual and commercial populations, now accounting for nearly one-quarter (24.3%) of commercial premiums in 2014 for exchange participants—over triple the 7.5% reported in 2005. Conversely, non-exchange companies saw their individual premium allocation as a percentage of commercial premiums double from 7.4% in 2005 to 16.3% in 2014. Comparatively, there was more of an increase in 2014 rising to 5.2% from a consistent range between 4.2-4.7% from 2005-2013;
  • Exchange participants increased their individual commercial premium mix to 12.0% in 2014 from 5.3% in 2005; and
  • The commercial group business segment remains an important market sector for insurers, even with its decline, as employer-sponsored health benefits are the predominant coverage for individuals, with approximately 149 million individuals receiving coverage through the workplace, according to industry reports.

Over the past several years, carriers have already incurred strategic, systems and administrative expenses leading to their current level of depressed earnings. Going forward, the expected uptick in utilization is something A.M. Best will closely monitor.

For the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=241548.

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.

Contacts

A.M. Best Company, Inc.
Jason Hopper, 908-439-2200, ext. 5016
Industry Research Analyst – Credit
Rating Criteria - Research and Analytics
jason.hopper@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best Company, Inc.
Jason Hopper, 908-439-2200, ext. 5016
Industry Research Analyst – Credit
Rating Criteria - Research and Analytics
jason.hopper@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com