Bad News for Obamacare Insurers: Will Premiums Spike in 2015?

One well-publicized tactic insurers have used to reduce costs in the Obamacare public exchanges is "network narrowing," by which insurers contract with fewer health care providers for health plans. However, a new draft letter from the Centers for Medicare & Medicaid Services (CMS) indicates that the government will crack down on this practice in 2015. Insurers will be required to include 30% of essential community providers (or ECPs) in their network, thereby establishing a floor for consumers looking for choice in doctors and hospitals.

While this may be good news for consumers from a choice standpoint, insurers will have to find other areas of potential cost savings or raise premiums. And this has been a low-margin business thus far, with insurers generally predicting either a narrow loss or a narrow profit. Some have threatened to substantially raise premiums in 2015, with Aetna's (NYSE: AET  ) CEO, Mark Bertolini, claiming that insurance rates in some markets could double next year.

With 2014 open enrollment in the exchanges about to end, and premium rates for 2015 soon to be released, what will this news mean for insurers, investors, and consumers? Will insurers make money on the public exchanges and participate again in 2015? And how will this affect your investments? Check in below, where Motley Fool health care analysts David Williamson and Michael Douglass consider the state of play with eight days left in Obamacare open enrollment.

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  • Report this Comment On March 23, 2014, at 12:18 PM, fredjohnson55343 wrote:

    This isn't "bad news for Obamacare Insurers". It's bad news for Obamacare buyers.

  • Report this Comment On March 23, 2014, at 3:48 PM, jaxkitten wrote:

    Gosh, another conservative rant about Obamacare. As surely as the rooster crows at dawn you're got wingnuts spewing against the new health care law. Have we seen their health care proposal? LOL.

  • Report this Comment On March 23, 2014, at 4:50 PM, Ardadius wrote:

    "Bad news for obamacare insurers"? No, bad news for obamacare. Motley Fool has been shilling for this doomed program from day one, and now the chickens are coming home to roost.

  • Report this Comment On March 24, 2014, at 12:59 AM, HappyCustomer wrote:

    This program has been sold as being the "affordable" care act. To me the biggest thing that it's had to offer has been coverage for the people who couldn't get coverage. That doesn't make it affordable.

    Then we get handed "facts" from people on both sides of the issue with agendas that are questionable at best and just dishonest at worst.

    Now I don't hate Obama and I'm not scared of the government, but I have not and unless I am proven to be in error....will not be in favor of Obamacare.

    The reason?

    Because if you roll out a program of this scale there should absolutely be no unknowns. How many people have no idea how much their coverage is unless they enroll? How many people have significantly different payments based on geography, income, day of the week, etc.?

    Bottom line is that I do think that there is a lot of misinformation out there, but that's because there has been and continues to be a lack of verifiable information to the public. The math has never added up on this.

    We all know that the system we had wasn't sustainable as it was. It wasn't smart and it's just getting worse. The government has been paying more and more for health care and that's partly because of the people, but it's mainly because we're paying ridiculous prices for care.

    What I would love to see is how the move to ACA impacts government spending on health related benefits though. I mean if we have a larger pool of people paying to me that should decrease the government's part. Even with subsidies and tax credits there should be a reduction. I haven't heard a peep about that. Of course even if I did could I trust it?

  • Report this Comment On March 25, 2014, at 4:32 PM, levelplayinfield wrote:

    We have a totally deceitful program sold to the American public and everytime a lie turns up or a mandate made to adjust the law ( as voted on) along with more deferrals to the implementation, we are told it is a work in progress and that it will take years to fix it. It was a lie from the beginning. THe only ones that believe anything from the party responsible for this debacle are the ones willingly drinking the kool-aid

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