Health insurers are now making healthy profits in the Affordable Care Act markets, the White House Council of Economic Advisers says in a new report.
“Despite significant initial financial losses in the individual market after the key provisions of the Affordable Care Act (ACA) took effect, health insurer profitability in the individual market has risen due to substantial premium increases, government premium tax credits that pay for those premium increases, and the large, government-funded, Medicaid expansion,” the report concludes.
It adds that those insurers “can expect to become more profitable this coming year due to the recent tax reform.”
You can see the widening gap between premiums and claims per enrollee in the chart from the report below.
The report also notes that health insurer stocks have outpaced the S&P 500 by 106 percent since the ACA was first implemented in January 2014.
But the Council of Economic Advisers also takes a swipe of sorts at the Obamacare structure, saying that the federal premium subsidies reduce incentives for insurers to compete on prices and that stable enrollment in ACA marketplace plans despite rising premiums “suggests a distorted market that involves large transfers from taxpayers to insurers.”
What it means: “The findings are an implicit retort to critics who have accused the Trump administration of ‘sabotaging’ the health care law,” writes Axios’ Sam Baker. “That said, the Trump administration’s policy changes really do have insurers on edge, and Congress’ imminent failure to pass a stabilization package would only make them more nervous — likely leading to even bigger premium hikes and a weaker market.”
