On-exchange profitability
It has been a busy day for me, so this is just a quick note on Exchange profitability:
Congrats to MD’s health CO-OP, Evergreen Health. Company reports 1st quarter profits – 1st time in the black. h/t @POLITICOPro #GtownCHIR
— Sabrina Corlette (@SabrinaCorlette) April 26, 2016
Also, Centene, the holding company for Ambetter is reporting profitability on the Exchange markets as well:
Centene (a Medicaid insurer) is achieving profit margins on its #ACA exchange plans “at the higher end of our targeted range.”
— Bob Herman (@MHbherman) April 26, 2016
What does this mean besides more hookers and blow for the C-level?
Profitability outside of California is increasingly plausible. And this makes sense. 2014 was a year where there were only guesses about both the Exchange population, the market structure, and federal policy structure (specifically the risk corridor revenue neutrality restrictions. 2015 had a bit more clarity on who was coming into the market, what was working and what was not working, and what federal policy on risk corridors would actually be. 2016 is the first year where the policies are priced on functionally decent real information and some of the amazingly dumb strategic decisions have been unwound through either course changes or through exiting the market.
As a simple reminder, competetive markets should see some companies make money and some companies that offer more expensive and less attractive products lose money. I would be extremely worried if everyone was making money after three years, just like I would be extremely worried that everyone was losing money after three years of increasingly better data.
One hopes that there will be some pointed questions asked of United’s C-level execs at the next board meeting.
One can hope. One will be disappointed, I’m sure.
Is the “outside of California” thing because profitability inside California is implausible or because it was already plausible?
@Roger Moore: Kaiser has been making money. Not a ton, and not a profit as not for profits have to plow that money back in or bonus it out.
@Roger Moore: California has had consistently decent profitability because CoveredCA’s active buyer model has kept most of the bottom feeding tricks that wreck markets out of play.
Given the double-digit premium increases I got hit with in 2015 and 2016, if Blue Shield of CA isn’t profitable, it sure as shit isn’t my fault.
Centene should be sold by Dems as an ACA job creater. Since they ACA passed they have built a shiny new skyscraper in Clayton (St. Louis) MO, and have built or leased offices all over the country. They have plans for building a lot more stuff, and employing a lot more people.
[…] The decision last week by United Healthcare to drop out of Obamacare got a lot of attention, but the truth is that UH was a pretty small player in the exchanges. What’s more important—but hasn’t gotten much attention—is the fact that more and more Obamacare insurers are getting close to profitability. Richard Mayhew comments: […]
[…] The decision last week by United Healthcare to drop out of Obamacare got a lot of attention, but the truth is that UH was a pretty small player in the exchanges. What’s more important—but hasn’t gotten much attention—is the fact that more and more Obamacare insurers are getting close to profitability. Richard Mayhew comments: […]
[…] customers is about 8 percent. At Balloon Juice, Richard Mayhew (an actual health insurance expert) points out how it’s working—and profitable—for insurance […]