Reuters Health Information: Humana CEO: New competition curbs Obamacare plan prices
Humana CEO: New competition curbs Obamacare plan prices
Last Updated: 2014-09-18
By Caroline Humer
BOSTON (Reuters) - New competition between health insurers
offering so-called Obamacare plans in 2015 is having an impact
on the pricing of such coverage, based on a first look at
proposed insurance premiums, the head of Humana Inc said on
The state insurance exchanges offering coverage under the
Affordable Care Act. President Barack Obama's landmark
healthcare law will begin enrolling customers for 2015 benefits
in mid-November. Now in its second year, Obamacare is attracting
health insurers to offer plans in more states after over 8
million people enrolled for coverage in 2014.
The country's largest insurer, UnitedHealth Group Inc, sold
Obamacare plans in only a few states in 2014. But for 2015, it
will sell plans in about two dozen states. Aetna Inc, Cigna
Corp, WellPoint Inc and Humana have said they would stick to
most of their markets.
"United is coming in. There is more competition coming into
the marketplace. It's going to make us all a little bit more
competitive," Humana Chief Executive Officer Bruce Broussard
said in an interview.
He said that larger insurers are pricing their premiums
within a narrower range of about 10 percent in many markets.
That strategy contrasts with 2014, when Obamacare plan pricing
showed much greater variation.
Humana will sell plans in 15 states for 2015 and has asked
for premium rate increases of 3 percent to the 20 percent range,
depending on the market.
Last year, large insurers were hesitant to enter the new
marketplace, concerned by conservatives' political opposition as
well as federal regulations that required that the plans be
available to any individual regardless of age or health status.
When the exchanges first launched in October 2013,
technology failures crippled the federal enrollment website,
Healthcare.gov, and many websites run by individual states. But
as the government fixed those problems, enrollment came in ahead
Now many insurers expect their Obamacare business to have
profit margins of 2 percent to 3 percent within a few years,
based on government forecasts for the market to grow to 13
million people in 2015 and 25 million by 2017.
Broussard said insurers may grapple with customer churn as
consumers seek better prices as well as more technology problems
as existing customers try to re-enroll either in the same plan
or in a new plan for 2015.
Humana, which has about 700,000 members enrolled in
Obamacare plans, has a large business providing medical benefits
and prescription drug plans under the Medicare program for the
elderly, and sees a risk posed by pricey new drugs expected to
reach the U.S. market in the next few years.
Insurers are already calling for a change in how new drugs
are priced after paying more than they expected for Gilead
Sciences Inc's new $84,000 Hepatitis C treatment. New
personalized treatments for cancer and an experimental class of
cholesterol fighting drugs are seen inflating those costs
"We've had a great trend over the last couple of years in
healthcare cost staying flat or decreasing," Broussard said. "If
these drugs come out at the price they are, I think you are
going to see a reversal of that."