Insurance companies fear a profit decline with Obamacare - WDAM-TV 7-News, Weather, Sports-Hattiesburg, MS

Insurance companies fear a profit decline with Obamacare

Obamacare has insurance companies worried about making profits. (Source:MGN) Obamacare has insurance companies worried about making profits. (Source:MGN)
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  • FAQ: What is Obamacare?

    FAQ: What is Obamacare?

    Several major provisions of the Affordable Care Act, commonly known as Obamacare, are taking effect in the coming months. Here are some details on what's happening, how it will work, and what it means for you.More >>
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(RNN) - Insurance companies may face reduced profits once the new Affordable Care Act, better known as Obamacare, goes into effect.

Facing potential losses are the largest U.S. medical insurer, UnitedHealth and others such as Aetna, WellPoint, Cigna and Humana. These companies are concerned about profit limits and new taxes to cover some of the cost of expanding healthcare coverage to as many as 30 million uninsured people starting in 2014, according to MSN.

In addition to imposing fees and restrictions on insurers, Obamacare also cuts funding for Medicare Advantage, the privately run version of the government's Medicare program for the elderly and disabled. This, too, could mean insurers will be stuck with skinnier profit margins, the Associated Press reported.

A number of large health insurance companies are bailing out of participation in the state-run Exchanges, as well, according to Natural News. The overall number of companies may be small, but the big companies are the ones who are choosing not to participate.

Anthem Blue Cross, Aetna, United Health Group and Humana have all said they won't be participating in exchanges in certain states. The exchanges will be the only place Americans will be able to purchase health insurance using taxpayer-provided subsidies.

According to CNSNews.com, Aetna, a Fortune 100 company with $34.2 billion in revenue last year, has withdrawn from exchanges in three states, including its corporate home state of Connecticut.

USA Today also notes that only three insurers remain in the Connecticut market to offer plans to individuals. This makes choices slim. The increase in major health insurers bailing out from some state exchanges will leave fewer options for consumers.

When state insurance regulators told Aetna its rates were too high, the company bailed, refusing to accept the rates the state wanted the company to charge, according to the Hartford Courant newspaper.

"This is not a step taken lightly, and was made as part of a national review of our exchange strategy," Aetna spokeswoman Susan Millerick told the paper. "Unfortunately, we believe the modifications to the rates filed by Aetna will not allow us to collect enough premiums to cover the cost of the plans and meet the service expectations of our customers."

While the individual mandate will increase the number of customers for the insurance industry,  cuts to Medicare Advantage could mean a loss in the number of customers. 

Medicare Advantage allowed seniors to receive some of their Medicare benefits through private insurers. It was a successful program that received high marks from its customers, and showed a better ability to control costs than Medicare itself.

With the cuts that have been made to this program, a large number of seniors who bought it are likely to end up dropping their private insurance because of the higher cost. It is expected  the number of lost customers will number in the millions, according to Wall St. Cheat Sheet.

Who wins and who loses under the new insurance program? For insurance companies, it's going to be who will be cheap to insure, and will add to their coffers, according to Daily Finance.

The Affordable Care Act enrollment is set to kick off Oct. 1.

Follow me on Twitter @KendraKelleyRNN

Copyright 2013 Raycom News Network. All rights reserved.

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