Neither side thought it would happen after a year of turbulence and uncertainty under the Trump administration’s efforts to kill the Affordable Care Act. But insurers are actually anticipating a relatively popular year, even if they stuck to the ACA’s exchanges instead of bailing out.

A report in The Hill says that analysts and experts point to higher-than-expected enrollment, among other factors, as drivers of what could turn out to be a decent year for insurance companies.

Katherine Hempstead, who directs the Robert Wood Johnson Foundation’s work on health insurance coverage, says, “I think the fact that enrollment is better than expected is good for insurers that really concentrate on the subsidized population.”

She adds, “I would think those insurers are feeling good. … It’s good for all the carriers that stayed in the market, but especially good for carriers that focus on subsidized people in the market.”

While Republicans had harped on their tired tune that the ACA is a failure, Democrats feared that the Republicans’ sabotage of everything from advertising of open enrollment to subsidies to insurers for low-income customers would sink the law. But just a half million fewer people signed up this year than last, with numbers during the shortened signup period hitting 8.7 million as local and state groups pushed harder to remind people to enroll in spite of their curtailed time and money limitations.

In addition, insurers raised premiums in anticipation of losses from cut subsidies, which meant that the federal government was actually on the hook for higher subsidy payments for customers because it canceled payments to insurers. And that means the industry could see a continuation of the profitable, stable trend that began in early 2016.

As a result, not only do analysts at Goldman Sachs, S&P Global Ratings and A.M. Best predict a profitable and stable 2018 for insurers, A.M. Best revised its insurance industry outlook to stable from negative, based on insurers’ adaptability and improved earnings.

Centene, CareSource and Blue Cross Blue Shield all filled the gap in counties that would otherwise have no ACA option; they’re also the firms expected to see the most benefit.

Hempstead says in the report, “The ones that are in the market after a lot of exits are more comfortable, more stable and understand, and [they] are not as easily shaken. You’re getting down to a more experienced, committed group of insurers. … If there’s an individual market, they’re going to serve it. They’re going to figure out how to make it work.”

A Q3 analysis by the Kaiser Family Foundation found insurers were already regaining profitability and the markets were continuing to stabilize before Trump canceled the subsidies, but despite the cancellation, it’s likely that insurers will come out of 2017 on the plus side of the balance sheet.

“It’s likely [canceling subsidies] would diminish their profits, but that insurers will still end up with a more favorable year in 2017 than they had in any of the previous years of the ACA marketplaces,” Cynthia Cox, director for the Program for the Study of Health Reform and Private Insurance at Kaiser, is quoted in the report.

Cox adds, “We’re still expecting 2017 to end up being a profitable year for many insurers in the individual market despite the loss of cost-sharing payments,” she said. And experts don’t expect much of an effect on enrollment or the marketplace.

Of course, there are still bumps in the road ahead, such as the elimination of the individual mandate and the possible exit of more insurers from the marketplaces—as well the potential lack of action in a dysfunctional Congress on the potential return of cost-sharing reductions. There’s also the possibility that two administrative rules could siphon off healthy people, which could further drive up premiums.

According to Chris Sloan, a senior manager at health care consulting firm Avalere, the drama of 2017 is not likely to be repeated in 2018.

Sloan says in the report, “I don’t think [2018] will be as chaotic as last year, with the constant repeal-and-replace legislation and major policy changes, like the elimination of the individual mandate and end of cost-sharing reductions.”

However, he warns, “But continued reductions in the market and substantial premium increases year after year is not sustainable. The market has weathered it, but given the trajectory that we’re on, it’s not a healthy trajectory for the exchange.”

Instant Insights /

2018 expected to be a good year for health insurance companies

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