|[October 03, 2013]
Fitch: Exchanges Critical to Post-ACA Health Insurance Market
NEW YORK --(Business Wire)--
The insurance exchanges mandated by the Affordable Care Act (ACA) are
expected to be key factors shaping the U.S. health insurance market over
the next several years, according to Fitch Ratings. Enough clarity
exists to directionally project various exchange-shaped trends, but more
is needed in order to ascertain magnitude, timing of emergence, and how
they will affect specific health insurers.
Many wishing to purchase insurance via the ACA program this week
experienced technical delays on government websites and an accurate
number of those successfully enrolled has not yet been made publicly
We believe as previously uninsured individuals begin using government
subsidies to purchase insurers' products on government-sponsored
exchanges, the individual market will expand. Additionally, some already
insured individuals are likely to shift purchases toward insurers'
products that are government subsidized and sold on government-sponsored
exchanges and away from insurers' unsubsidized products.
Employers' desire for cost certainty and heightened comfort with
technology purchasing will likely drive them to provide workers with
allowances to purchase insurance, resulting in an expansion of the
individual market and a contraction in the employer-sponsored group
In addition to acclimating to the post-ACA environment, health insurers
also face several earnings-related headwinds including the imposition of
separate industrywide fees designed to partially fund the exchanges and
reinsurance vehicles designed to help stabilize premium rates in the
ndividual market. Insurers will also have increased difficulty
projecting utilization trends due to the influx into the system of
previously uninsured consumers that may exhibit unforeseen utilization
Insurers are selectively adopting partial vertical integration
strategies as a means to reduce costs, improve medical outcomes, and
protect profit margins. This typically means finding health providers or
data analytic companies with specific capabilities in areas that have
high enrollment density. To a lesser extent, insurers have focused on
horizontal integration strategies to add scale, reduce unit costs, and
enhance bargaining power over providers. Fitch believes that
scale-focused acquisitions by insurers are likely to continue.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article, which may include
hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com.
All opinions expressed are those of Fitch Ratings.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
[ Back To Technology News's Homepage ]