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Topics: Obamacare

Insurers say they're in Obamacare for the long haul

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Beltway Confidential,Opinion,Philip Klein,Obamacare,Health Care Exchanges

President Obama's health care law may have gotten off to a rocky start, but executives of major private health insurance companies are informing investors that they're still betting on the program in the long run.

Speaking at a health care conference sponsored by JPMorgan this week, insurers indicated that that they viewed the 2014 implementation of the health care law as a learning opportunity.

Over time, the health care law’s expansion of Medicaid and creation of government-run insurance exchanges promises to funnel hundreds of billions of dollars of taxpayer money into the insurance industry. And insurers don’t want to miss out on the opportunity.

Helping matters is the fact that insurers are counting on government to cushion the financial blow that could come from the law's botched rollout.

“The exchanges — we really look at this year as a learning opportunity for us as an industry and as an organization,” Bruce D. Broussard, the chief executive officer of Humana Inc., said Monday.

Last week, Humana disclosed in a filing with the Securities and Exchange Commission that the risk pool of enrollees in the new exchanges would be worse than originally expected.

WellPoint Inc. CEO Joseph Swedish on Tuesday predicted that, “The rollout of public exchanges and the expansion of Medicaid under the Affordable Care Act will accelerate enrollment growth opportunities in the years ahead.”

Through its subsidiary Amerigroup, WellPoint helps manage some state Medicaid programs.

“We believe our 2014 investments, positioning and operational experience will drive growth in 2015 and beyond as functionality of the exchanges improves and people become more familiar with the process and subsidies,” he said.

Though the front end of the exchange website had improved, he said, insurers were still having problems on the back end of the website that transmits information collected by the exchanges to the insurers.

He said it was “encouraging” that the pace of signups had accelerated in December and said the company expected a similar bump ahead of the March 31 deadline to purchase coverage and avoid the individual mandate penalty.

Swedish said the company was continuing to assess the effects of the health care law.

“Despite the near-term uncertainty, we believe exchanges will be growing as a big part of the market over time,” he said. “We are more focused on the end game of the exchanges than the twists and turns in the near term.”

Cigna CEO David Cordani delivered a similar message to the conference Tuesday.

Though early enrollment in the exchanges and the mix of healthy and sick beneficiaries "is not what everybody anticipated, I would underscore this may present an attractive long-term opportunity,” he insisted.

He said Cigna had made a decision early on to only participate in a limited number of markets as implementation began, and ended up offering plans on the exchanges of five states.

Jay Gellert, the CEO of Health Net, a managed care company that has a Medicaid business and a large presence in the California insurance market, was extremely bullish on the law.

“We’re all in in the ACA,” Gellert said. “We’re all in and we’re happy we are.”

He said of the health care industry: "The business is going to be increasingly government driven ... the commercial-to-government ratio is going to change dramatically over the next two or three years.”

Gellert went as far as complaining about the Wall Street Journal’s critical coverage of the health care law, saying that the newspaper “has decided that they have a jihad on the Affordable Care Act.”

As a result, he said, many people were unaware of positive news. The market in California, he said, was functioning well, though he acknowledged the law may not be working as well in other states. He described 2014 as a "transition year."

He said the law was accelerating a trend toward insurance plans with narrower networks of providers and placing downward pressure on payments to doctors and hospitals.

“The alternative is price-setting and various forms of single-payer and nothing different than that,” he said. “So I believe in the provider community we’re beginning to get a sentiment that this has to work.”

He added, “the die has been cast.”

In addition, he noted the “stability provided by the ‘three Rs,’” a reference to the health care law’s reinsurance, risk corridors and risk adjustment programs that seek to compensate insurers for higher-than-expected losses during the rollout of the law.

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