Moody's is jumping on the health care reform bandwagon.
In a newly revised outlook for the insurance industry, Moody's has concluded that carriers have, for the most part, successfully adapted to the tenets of the Patient Protection and Affordable Care Act. As a result, it upped its industry rating from a negative to stable — an indication that it will keep a close eye on how things unfold, but that overall it anticipates a smooth transition into the brave new health insurance world.
"Our revised outlook on the US health insurance sector reflects the insurers' ability to adapt to health care reform," said Stephen Zaharuk, a Moody's senior vice president. "While ongoing legal and political uncertainties remain, we believe that insurers will continue to minimize these risks over the next 12 to 18 months."
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Among the factors Moody's says are now looking better:
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Lower utilization of medical services, driven primarily by stronger managed care oversight and higher out-of-pocket costs for patients;
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Promising growth shown by health insurers in Medicare Advantage enrollment — 9 percent plus in 2014, "despite cuts in government reimbursements to insurers."
Moody's said events it will track include the upcoming U.S. Supreme Court's decision in the federal premium subsidies challenge, and other legal challenges to the law.
"In addition, the affordability of health insurance will be an ongoing concern. Premiums continue to increase, as are out-of-pocket costs because of higher deductibles and co-pays. While insurers are working to curb costs with risk-sharing contracts with providers and other tools, the long-term impact of their efforts is uncertain," Moody's said.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
