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Marketplace

The health insurance industry looks…well, healthy

Dan Gorenstein Mar 26, 2015
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On Thursday, a new report out from the Commonwealth Fund finds the health insurance industry is doing just fine, thank you very much.

That’s contrary to the deep-seated fears of some as the Affordable Care Act launched back in 2010. But with three years’ worth of data on the books now, and insurers’ stock prices soaring, those fears have faded.

From a business standpoint, it’s a particularly impressive feat considering that on the eve of the ACA, some insurers wondered how they’d keep the lights on after the federal government killed its golden goose. Under the law, the ACA bars companies from denying sick people coverage, a source of significant profits. It was a daunting moment says Wake Forest Professor Mark Hall.

“Insurance companies had to figure out how to sail through those shifting currents, and what we’ve seen after these several years is that they’ve sailed through those choppy seas quite well,” he says.

Despite no longer cherry-picking patients, the Commonwealth report shows that industry profits remain nearly identical to before implementation of the ACA. Bloomberg Intelligence Analyst Brian Rye says Obamacare has been very good for insurers.

“When it becomes a law that you have to do something it’s amazing how much demand improves,” he says.

Of course Rye is talking about the fact that now most adults are required to carry insurance, and the federal government helps people pay for that coverage. That has led to millions of new customers for the insurers who today have a new golden goose.

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