Report: Insurers ‘Lost a Lot of Money’ Selling Obamacare Plans

Insurers lost at least 12 percent on Affordable Care Act plans in 2014, according to a new report.

The author of the report, Brian Blase, a senior research fellow at the Mercatus Center at George Mason University, told The Daily Signal in an interview that the losses will mean higher premiums for consumers.

He said that his estimate of 12 percent is “conservative.”

Blase examined risk corridor data recently released by the Obama administration to calculate the losses. The temporary risk corridor program requires insurers whose premiums exceed expenses to pay a portion into the program and insurers whose expenses exceed premiums to receive funds in an attempt to minimize risk during the first three years of the law’s implementation.

The report accounts for a $7.9-billion reinsurance program subsidy that the insurers received.

“In 2014, insurers lost a lot of money selling Obamacare plans,” Blase said.

According to his findings, under Obamacare, insurers underpriced their plans in an effort to “capture market share,” only to raise prices in subsequent years. After implementing the lower prices, insurers found they had an older, sicker client base than they anticipated.

“Healthy, younger, higher income people really haven’t signed up,” Blase said.

Blase warned that the losses will mean higher premiums, and higher premiums will mean that fewer healthy people will sign up for insurance plans.

Ed Haislmaier, a senior research fellow in health policy studies at The Heritage Foundation, said the report is “consistent with some of the other things we’ve seen.”

“We’re seeing significantly higher rates due to the initial underpricing,” Haislmaier said.

Haislmaier also warned that “over time, premiums will go up.”