Friday, August 7, 2015

Health Insurer Earnings and Merger Update

The major health insurers have announced their quarterly earnings. For UnitedHealth Group, the largest health insurer, plus the six which are currently engaged in take-over deals, the results were largely positive. The results, and the market’s reaction, indicate three things:

Health plans have largely been able to pass increases in medical costs onto their members, challenging the notion that Obamacare’s regulations on profit have benefited consumers.

The risk of participating in Obamacare’s exchanges is not decreasing and insurers continue to be challenged pricing premiums, even though the taxpayer funded training wheels (risk corridors and reinsurance) come off in 2017.

Investors continue to assign very high risk premiums to two of the three recently announced mergers of health plans.

Read the entire column at Forbes.

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