The latest Patient Protection and Affordable Care Act delayshaven't been good news for an administration still struggling tokeep its image despite the law's rocky rollout. 

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The delays aren't good news for carriers, either.

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Moody's Investor Service says PPACA's latest delays — includingallowing individuals to remain enrolled in non-PPACA-compliantpolicies for 2014; extending deadlines for 2014 enrollment; andchanging the 2015 open enrollment period — are a “credit negative”for carriers, and warn that more changes to the law's rollout,which they say are now expected, will have further negativeimplications for carriers.

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“The recent last-minute administrative changes made by the ObamaAdministration are credit negative for U.S. health insurers as theyexpose the sector to additional financial and operational risks,”Moody's concluded in its latest sector comment.

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First, the administration's backtrack on the cancelled policiesare problematic, said Steve Zaharuk, who wrote the report.

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“This change will likely have a negative effect on the riskprofile of the exchange health risk-pool, should healthy youngermembers take advantage of this last-minute waiver. The uncertaintycreated as state insurance commissioners and insurance companiesdecide whether or not to offer this option to their insured membershas further delayed enrollment in the exchanges,” he said.

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The 2014 deadline extensions will result in administrativeburdens and lost revenue for carriers.

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The first change — allowing individuals to wait until March 31to enroll and avoid a penalty — will result in “insurers losing upto two months of premium on these individuals as a result of theextension,” Zaharuk said. “In addition, it is more likely thatyounger, healthier individuals will take advantage of thisextension, resulting in an adverse risk-pool for the first fewmonths of the year.”

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The recent announcement pushing back the individual coverage enrollmentdeadline to Dec. 23, from Dec. 15, “will causeinsurers various administrative problems because they will have tomake sure that these individuals have been coded correctly in theirsystems in time to receive health care benefits on the first of theyear,” Zaharuk said. “If there is a surge in enrollment activity inlate December as website issues and other uncertainties areresolved, it will be nearly impossible for insurers to complete theenrollment process in time.”

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The 2015 enrollment delay also creates several issues forcarriers, Moody's said, including an administrative challenge ofenrolling members in time January 2015 over a compressedtimeline.

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In November, Moody's issued a sector commentsaying PPACA will likely negatively affect earnings in 2014. Thoughthey said last month the situation could right itself, the investorservices corporation seemed far less hopeful in its latestreport.

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Moody's said more PPACA changes and delays from theadministration should be expected.

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“Any further enrollment deadline extensions will exacerbateadverse selection and significantly increase the probability thatthese products will lower insurers' expected profits, or evenresult in financial losses for them,” Zaharuk said. “In addition,the administration's disclosure that the back-end payment systemintended to transfer government subsidies to insurers has not beenbuilt, casts doubt on the government's ability to make timelypayments to insurers.”

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