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ACA Fail Fractal
Obamacare Leads Moody's to Downgrade Insurers

Moody’s has just downgraded health insurers from a stable to a negative outlook, based largely on the disruption Obamacare has introduced. A key factor in the downgrade was the disproportionately high number of older people who signed up for the insurance during the first ACA enrollment period. WaPo has more:

“We’ve seen a lot of risks come up on our radar screen,” said Stephen Zaharuk, Moody’s senior vice president and author of the report. “We thought they could handle some of them, but as they kept piling up, that became more of a concern.”

Recent enrollment data shows that 24 percent of enrollees on the exchanges are young adults between 18 and 35, a demographic whose lower-than-average health-care costs would be expected to hold down premiums. The Obama administration has said it believes it needs 40 percent of exchange sign-ups to come from this age group.

“If there is an older, less healthy population, the rates are going to face upward pressure,” Zaharuk said.

When the law was being put together, insurance company leaders were practically the first people in the room, because Obama knew he couldn’t get any kind of health care bill passed without them. They eventually agreed to support the ACA because the individual mandate was supposed to provide a whole new pool of clients that would offset their loses. But it looks like their partnership with Obama is now coming back to bite them. If insurers start to get more and more worried about how Obamacare will affect their prospects, the ACA could risk losing a major ally.

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  • Corlyss

    I’m waiting for the other shoe to drop. Moody’s and the other raters live and die by government largess. Mr. President will not be pleased that Moody’s outed the plan so soon.

    • Boritz

      Yes, the rating agencies were good sports about mortgage backed securities. Why do they have to turn obnoxious now? Their attitude has been noted.

      • Corlyss

        I suspected but did not know for a fact that the rating agency that downgraded the US credit rating a couple of years ago experienced retaliation from the Thug-in-Chief’s satraps.

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