Published April 13th, 2017 by Stephanie
Health Insurers’ Profits Soaring Under Obamacare - USA RxOne of the key points of Obamacare was the notion that big healthcare companies would be impacted by the plan. Big managed care companies have long said that the Affordable Care Act has fundamental flaws, but seem to be reaping rewards nonetheless. As Republicans push to repeal or replace Obamacare, managed care companies may push rhetoric that Obamacare is bad and that they need rescuing, as they say that heavy use of medical services is costing them revenue, and thus explaining upcoming premium increases. But is this really the case?
The Affordable Care Act was signed into law in March 2010. Since then, the big managed care companies within the Standard & Poor’s 500-stock index have far outperformed the index. In that time frame, the index itself rose by approximately 1200 points. In that timeframe, the S&P yielded returns of 135.6 percent, while managed care stocks yielded returns of nearly 300 percent.
The problems that the big managed care companies have encountered under Obamacare have been minimal. While the companies have notched profits through legislation within Obamacare, such as the expansion of Medicaid, they have also managed to insulate themselves from the portions of the law that cut into their profits.
Companies have also learned to reduce their exposure to what initially was the biggest problem in Obamacare. Money-losing insurance was sold in public exchanges to individuals who often received government subsidies. However, companies have recently announced that due to mounting losses from these sales, they would cut their participation in those markets. United Healthcare, for example, cut its participation in the sales from 34 states in 2016 to three states in 2017.
Additionally, companies have adjusted their balance sheets to set aside the expected losses in these marketplaces. Investors have been able to assess the company’s value regardless of the problem with the exchanges, which has allowed the managed care companies’ profits to soar. To put it simply, the share prices of care companies have been unaffected by the problems the companies have been having with the Obamacare exchanges.
Managed care companies have also attempted to blame losses that occur on Obamacare customers. Companies have stated that people who signed up for health insurance under the Affordable Care Act have higher rates of certain diseases than those were have individual coverage prior to healthcare reform. Companies also believe that customers are visiting the emergency room excessively.
As mentioned before, the expansion of Medicaid has been extremely profitable for managed care companies. It provides steady growth, as companies offer insurance to low-income residents in various states. They also see growth with older patients as well. As baby boomers begin to retire and leave their workplace health care plans, they are going to Medicare, which provides a tremendous opportunity for growth. Direct government premiums from Medicaid and Medicare can account for 25 percent of big managed care companies’ revenues.
Even if managed care companies are seeing more profits than ever, you should not have to pay more out of pocket. If your insurance costs have risen, consider using a USA Rx prescription card. Founded to bring cost savings to health care products, you can receive discounts of up to 75% off and pay the discounted rate on all your prescriptions. Don’t allow managed care companies to set unobtainable rates.