3Q Was Mostly Kind to Health Plans, but Wall Street Concerns Grow About 2014, Analysts Tell AIS’s Health Plan Week

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Financial analysts offer their thoughts about the impact of Obamacare’s implementation on the health insurance market in the Nov. 11 issue of Atlantic Information Services’s Health Plan Week.

Even as most publicly held health carriers logged successful third quarters, it is clear investors’ attention has shifted to next year and concerns about how the slow rollout of public exchanges, reform law fees and lower Medicare reimbursement will affect stock performances. And, as financial analysts observe in the Nov. 11 issue of Atlantic Information Services’s (AIS) Health Plan Week (HPW), health plan executives could face close scrutiny as a result.

All of the top insurers reporting third-quarter results have experienced some level of Wall Street trepidation about next year’s exchange enrollment despite the relatively small book of business insurers like UnitedHealth, Aetna Inc., Cigna Corp. and even WellPoint, Inc. have in the individual space. “What we’re hearing,” Steve Zaharuk, senior vice president, Moody’s Investors Service, tells HPW, “is that the headwinds for 2014 have got people nervous on uncertainty about how the ACA works, how that all plays out, issues about the taxes, the fees.”

The Nov. 1 firing of WellCare’s CEO Alec Cunningham is proof that boardrooms can make changes quickly. In that case, Vishnu Lekraj, senior health care analyst for Morningstar Inc., tells HPW that “given what’s going on with Obamacare and what’s going on with the new environment, the firm felt like it needed change. I definitely do think there is going to be a lot more pressure on them [CEOs] to produce results in the face of a lower profit environment. That definitely is going to be a key thing to watch over the next couple of quarters to see how well some of these firms respond.”

Well-established insurers like UnitedHealth, Aetna and Humana may not see as much heat on top executives, but given the moderation in some companies’ stock prices in recent times “there is definitely going to be more scrutiny,” Lekraj adds. The CEO likely to be most closely watched is WellPoint’s Joseph Swedish. “I won’t say he’s on the hot seat, but that’s the one that is going to be looked upon the most…to see how well he navigates the firm from a recovery standpoint, both internally and how they handle the exchange moving forward given their strategy of being heavily involved in the exchanges,” Lekraj says.

Visit http://aishealth.com/archive/nhpw111113-01 to read the article in its entirety, which includes more observations from analysts on health plans’ third-quarter 2013 earnings.

About Health Plan Week
Published since 1991, the 8-page weekly newsletter Health Plan Week provides timely, objective business, financial and regulatory news of the health insurance industry. Coverage includes new benefit designs and underwriting practices, new products and marketing strategies, mergers and alliances, financial performance and results, Medicare and Medicaid opportunities, disease management, and the flood of reform-driven regulatory initiatives including medical loss ratios, exchanges, ACOs and myriad benefit design changes that are mandated. Visit http://aishealth.com/marketplace/health-plan-week for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at http://AISHealth.com.

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