As a result of the continued uncertainty of Affordable Care Acts impact, Moodys changed the outlook for U.S. health insurers to negative from stable. Uncertainty over the demographics of those enrolling in individual products through the exchanges and the unclear impact of the industry assessment tax that begins in 2014 are key factors in the change.
Changing dynamics will have an uneven effect on insurers, as the impact of these factors will vary by market segment and geography. Medicaid business is particularly vulnerable, as insurers cannot pass on additional costs to consumers, and it remains to be seen whether states will permit insurers to factor in the assessment cost in determining Medicaid reimbursement rates, Moodys said. The rating agencys view continues to be that the larger and more diversified insurers will be better positioned, both financially and strategically, to meet the challenges facing the sector.
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