Commonwealth examined 144 insurers that sold plans on the marketplace to more than 1,000 customers in 2014. Using rate data from CMS, the study compared actual to projected 2014 medical claims and medical loss ratio for those ACA-compliant health plans.
Below are four study findings.
1. Insurers made nearly twice as much money from healthcare premiums in 2014 compared to the previous year. However, overall profits diminished because of higher payouts. Overall, health insurers underestimated their total medical costs by about 5.7 percent in 2014.
2. About 25 percent of insurers fared substantially worse than other payers, and underestimated claims by an average of 35 percent.
3. Many insurers’ underestimated claims were offset by nearly $7.9 billion in reinsurance payments for high-cost patients from the federal government. Overall, reinsurance payments to insurers were almost 50 percent higher than what insurers anticipated.
4. The best-performing quartile of insurers in the individual marketplace had an 8.5 percent profit margin in 2014. The worst-performing quartile of insurers averaged a 21.8 percent loss.
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