Anthem CEO Won’t Commit To Obamacare Beyond 2017

Key changes need to be made to put Obamacare on a “path toward viability,” Anthem chief executive Joe Swedish told analysts during the company’s third-quarter earnings call Wednesday. Anthem, which operates Blue Cross and Blue Shield plans in 14 states, is one of the largest providers of Obamacare  coverage after Aetna AET +0.85%, Humana HUM +0.87% and UnitedHealth Group UNH +0.85% decided to scale back participation on public exchanges for 2017. Anthem has 1.4 million members in Obamacare plans including 889,000 who have purchased from the exchanges.

Among changes needed are elimination of certain special enrollment periods that allow Americans to sign up for coverage year-round and make it difficult for actuaries to predict costs. In addition, Swedish, like other health insurance CEOs, said the “risk adjustment model” needs to be updated to improve risk pools that currently see more sick Americans with chronic conditions than younger and healthier people. Because younger people haven’t signed up and Americans have opted instead to pay a penalty, enrollment in individual coverage hasn’t been the 20 million to 25 million that insurers anticipated, Swedish said, citing past Congressional Budget Office estimates. Instead, insurers have been competing for business in a much smaller risk pool of 10 million to 11 million customers who purchased coverage on exchanges

Source: Anthem CEO Won’t Commit To Obamacare Beyond 2017

Anthem’s concerns touch upon a major tradeoff contained in the individual health insurance market reforms of the Patient Protection and Affordable Care Act. In exchange for agreeing to end medical underwriting of those who apply for coverage and accept partial community rating, the reforms are intended to reward health plans by boosting enrollment and enhancing the stability of the individual market.

With more covered lives with continuous, year round coverage, the market becomes more actuarially viable and predicable. That’s why health plan issuers were initially bullish on the reforms, foreseeing a much needed rescue of a market segment they had all but lost to the adverse selection death spiral. Now four years into the reforms, they’re undergoing a crisis of confidence and not certain they’re getting the benefit of the bargain.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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Frederick Pilot

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