Moody’s downgrades outlook for insurance industry to negative, thanks to ObamaCare

posted at 1:21 pm on January 23, 2014 by Allahpundit

Sounds to me like it’s time for a threatening phone call.

They’re laying this right at Obama’s feet, do note:

Moody’s Investor Service has changed its outlook for the U.S. health care insurance sector from stable to negative, citing Obamacare’s rollout and the uncertainty it brings.

The private credit rating agency said potential fallout from the Affordable Care Act’s implementation — including changes to the individual market and the impact of the law’s “employer mandate” on commercial group plans in January 2015 — presents the greatest challenge to health insurers’ credit profile. Lower reimbursement rates among Medicare Advantage plans also are creating financial pressure, it said.

“While all of these issues had been on our radar screen as we approached 2014, a new development and a key factor for the change in outlook is the unstable and evolving regulatory environment under which the sector is operating,” Moody’s said. “Notably, new regulations and presidential announcements over the last several months with respect to the ACA have imposed operational changes well after product and pricing decisions had been finalized.”

First came the president’s panicky, ass-covering call to un-cancel plans, replete with promises to use the law’s bailout provisions to help insurers cover the extra cost. Then came the mandate penalty waivers for people who’d lost their coverage, which treated ObamaCare itself as a “hardship” worthy of an exemption for individuals. Then came the shifting enrollment and payment deadlines in December, creating a backlog of applications that insurers are still coping with. And then came the threat from Sebelius to boot companies from the exchanges next year if they didn’t let people pay their first month’s premium after coverage went into effect on January 1. Hard to believe in hindsight, but that witches’ brew of uncertainty was concocted over just five short weeks, from mid-November to the week before Christmas. The news isn’t that insurers are now an unacceptably unstable investment due to capricious politicized meddling by the feds. The news is that that was inevitable and yet only now is Moody’s getting around to the downgrade. Of course the outlook’s negative, silly.

And the uncertainty’s not going away soon. On the contrary, here’s what Megan McArdle sees in the crystal ball:

· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.

· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?…

· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.

· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.

They’ll probably delay or scale back the small-business cancellations too. Why wouldn’t they? Why play this shell game of moving around deadlines and granting exemptions in 2013 to protect the party if they’re going to sit idly by while millions upon millions of people are booted from their employer plans in an election year? This is the deeper point of the Moody’s downgrade: The insurance industry is now essentially a political creature, and politics can change quickly. How’s an investor supposed to assess risk if he or she can’t know whether the president might need to knock over the chessboard at any given moment for his own political interests? Even if you think Obama and the Democrats are so invested in O-Care’s success that they’ll find a way to keep federal money flowing to prop it up, the lingering bitterness after the law was passed on party lines and the recurring fact of potentially game-changing elections means it’ll be years before the industry enjoys real stability. And yet, in partnering with O on sweeping reform in the expectation that it would bring them millions of new customers, this is what insurers signed up for. They bought the ticket. Hope they’re enjoying the ride.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

#WINNING!

PolAgnostic on January 23, 2014 at 1:22 PM

bwahahahahaha!!!11!!!eleventybillion!!!

love it!

DanMan on January 23, 2014 at 1:25 PM

Holder to threaten them in 3, 2, 1

Schadenfreude on January 23, 2014 at 1:26 PM

On the contrary, here’s what Megan McArdle sees in the crystal ball:

She so deserves the pajama-boy she voted for, twice.

Schadenfreude on January 23, 2014 at 1:27 PM

No whining

And still Kathleen has her job….

cmsinaz on January 23, 2014 at 1:28 PM

Dear leader will definitely delay anything began past the elections
Guaranteed

Its the law went out the window a long time ago

cmsinaz on January 23, 2014 at 1:30 PM

This is the deeper point of the Moody’s downgrade: The insurance industry is now essentially a political creature, and politics can change quickly.

Again, the entire goal of the ACA was not to fix the challenges the country faced within the healthcare industry…it was to seize 1/6th of the national economy and firmly ensconce it within the federal government’s control. The insurance industry is now essentially a political creature because it is under the control, and whim, of the federal government’s executive branch. They were seduced by the promise of the ‘millions of new insurance customers’ that the ACA was supposed to force into the system – and instead find themselves with little real control of their future…which is looking increasingly as tipping towards single payer.

Athos on January 23, 2014 at 1:31 PM

Banana republic.

BuckeyeSam on January 23, 2014 at 1:33 PM

Other than that, McArdle’s article is very realistic. May it be so!!!

I hope that every ins. co, and every med. device co. and every doctor who stood with obama, will go under.

Rs, if you bail them out, go to Hell, along with all the amnesty shills.

Schadenfreude on January 23, 2014 at 1:33 PM

I’d have thought that the insurer’s executive boards would have realized that there’s no such thing as a free lunch.

They asked for it, I hope they choke on it.

thatsafactjack on January 23, 2014 at 1:33 PM

But on the bright side we all have less of a chance of our tonsils from being taken out willy nilly!!

tommer74 on January 23, 2014 at 1:35 PM

Athos on January 23, 2014 at 1:31 PM

Rather than campaigning on amnesty, the GOP should be screaming all the time about how the Dems screwed this up. The should focus on list of five to ten talking points highlighting the biggest outrages and lay it at their feet, publicly ridicule any calls for MORE government solutions, and suggest a better way.

BuckeyeSam on January 23, 2014 at 1:35 PM

DOW -200

Eph on January 23, 2014 at 1:36 PM

Just another sign of the incompetence and screw-up nature of Obama’s presidency. Not that we should be a fans of these awful rating agencies that greatly contributed to the 2008-9 market-bubble & collapse with there outrageous overrating of investment bundles.

Chessplayer on January 23, 2014 at 1:36 PM

Alert – obama’care’ makes this more of a trench.

Don’t sign up for Medicaid, or let your relatives do so, without being fully informed. It’s a huge trap. Strapped for dough, the states are recovering billions from estates.

Schadenfreude on January 23, 2014 at 1:38 PM

Let’s see now, making it up as you go doesn’t promote stability…Got It!!

Deano1952 on January 23, 2014 at 1:38 PM

Obama will sign an executive order postponing the Moodys downgrade until after the 24014 election.

It’s how he rolls.

MichaelGabriel on January 23, 2014 at 1:40 PM

“Notably, new regulations and presidential announcements over the last several months with respect to the ACA have imposed operational changes well after product and pricing decisions had been finalized.”

No doubt this is the fist Obowma has heard of this…

… and nobody is more outraged than him.

Time to get a panel together to find out exactly when he knew what he didn’t know, and then he will take the steps to hold those responsible accountable, while ensuring this will never happen again, before it turns into a phony scandal…

… No doubt.

Seven Percent Solution on January 23, 2014 at 1:40 PM

Obama, his Regime and the Insurance companies DON’T CARE.

They all know they already have a taxpayer bailout waiting on deck.

Obama, et al, are just waiting for it to get bad enough and the right time politically to enact it.

America has not yet even begun to sniff the stench we’re all going to be living with in the next couple of years with this disaster.

Meople on January 23, 2014 at 1:44 PM

It’s almost as if all of the people in the Obama Regime have no real world business experience…Oh and they think they are very smart.

jukin3 on January 23, 2014 at 1:46 PM

And yet, in partnering with O on sweeping reform in the expectation that it would bring them millions of new customers, this is what insurers signed up for. They bought the ticket. Hope they’re enjoying the ride.

Indeed, straight to Hades!

Schadenfreude on January 23, 2014 at 1:48 PM

I dunno. An outright delay would be admitting too much. I think odumbass will grant specific exemptions and continue to make an even bigger mess of this. Of course there will be spin from the house.

JAGonzo on January 23, 2014 at 1:48 PM

Even if you think Obama and the Democrats are so invested in O-Care’s success that they’ll find a way to keep federal money flowing to prop it up, the lingering bitterness after the law was passed on party lines and the recurring fact of potentially game-changing elections means it’ll be years before the industry enjoys real stability.

Uh no, AP. There will never be stability. Obama is in office for 3 more years. So rest assured, the insurers are guaranteed to face massive chaos over that timeframe. Especially if the GOP retakes the Senate. Then Obama will go into executive order overdrive.

And just about the time Obama’s 2nd term is winding down and the insurers can pin their hopes on a Republican taking office, the bailout provision sunsets(assuming it isn’t repealed before then). Then even if the law is implemented as written under the next administration(extremely doubtful, BTW), there’s no taxpayer funded cushion waiting for them when they find themselves drowning in red ink yet again.

Doughboy on January 23, 2014 at 1:51 PM

O/T Sorry. Did anyone see that O’Reilly is going to interview The Won on Super Bowl Sunday? There won’t be a TV screen made that will fit that swelled head. Yuck.

Cindy Munford on January 23, 2014 at 1:53 PM

Can I fire Moodys?
-Zero

tommer74 on January 23, 2014 at 1:57 PM

Can it be that America is finally fighting back?

PattyJ on January 23, 2014 at 1:59 PM

Cindy Munford on January 23, 2014 at 1:53 PM

I think he was “allowed” to do this a couple of years ago.

Would have thought it was “tingles” Matthews.

Barred on January 23, 2014 at 2:00 PM

O/T Sorry. Did anyone see that O’Reilly is going to interview The Won on Super Bowl Sunday? There won’t be a TV screen made that will fit that swelled head. Yuck.

Cindy Munford on January 23, 2014 at 1:53 PM

He’s done it before. Unfortunate anyway, though. Boo.

22044 on January 23, 2014 at 2:01 PM


Other than that, McArdle’s article is very realistic. May it be so!!!

I hope that every ins. co, and every med. device co. and every doctor who stood with obama, will go under.

Rs, if you bail them out, go to Hell, along with all the amnesty shills.

Schadenfreude on January 23, 2014 at 1:33 PM

Need a little help here. Can you reference which medical device companies stand with obama? I can certainly tell you that mine does not.

HomeoftheBrave on January 23, 2014 at 2:01 PM

Hard to believe in hindsight, but that witches’ brew of uncertainty was concocted over just five short weeks, from mid-November to the week before Christmas.

Not much unlike the Titanic splitting in pieces and leaving a long and wide debris trail. It went down fast and hard. Scientists were unexpectedly surprised.

Tsar of Earth on January 23, 2014 at 2:02 PM

O/T Sorry. Did anyone see that O’Reilly is going to interview The Won on Super Bowl Sunday? There won’t be a TV screen made that will fit that swelled head. Yuck.

Cindy Munford on January 23, 2014 at 1:53 PM

I’ll pass. The last time O’Reilly interviewed Obama on Super Bowl Sunday, it was an embarrassing softball Q&A.

Doughboy on January 23, 2014 at 2:03 PM

Moody’s downgrades outlook for insurance industry

Average life expectancy also anticipated to be downgraded shortly.

lynncgb on January 23, 2014 at 2:04 PM

The administration has given new meaning to the word buffoonery.

scalleywag on January 23, 2014 at 2:05 PM

Screw the insurance companies. They wanted ObamaCare, they got ObamaCare. You lay down with dogs, you”re gonna get fleas!

GarandFan on January 23, 2014 at 2:05 PM

They’re laying this right at Obama’s feet,

Alternate headline…… Moody’s discovers that Obama is black.

Happy Nomad on January 23, 2014 at 2:06 PM

Bailout coming straight ahead.

kcewa on January 23, 2014 at 2:08 PM

O/T Sorry. Did anyone see that O’Reilly is going to interview The Won on Super Bowl Sunday?

Cindy Munford on January 23, 2014 at 1:53 PM

I’d watch the Puppy Bowl before watching the rat-eared coward talk about himself and the fact he’s among the top four Presidents or how super awesome Obamacare is.

Happy Nomad on January 23, 2014 at 2:09 PM

In, like, totally unrelated news, Moody’s to face an IRS audit as well as a visit from ATF. EPA as well.

rbj on January 23, 2014 at 2:13 PM

the rat-eared coward

Happy Nomad on January 23, 2014 at 2:09 PM

I will thank you not to refer to president dog-eater as a rat eared coward.

Lanceman on January 23, 2014 at 2:14 PM

The insurance companies got in bed with Obama on Obamacare so they get no sympathy from me.

buckichick1 on January 23, 2014 at 2:15 PM

I will thank you not to refer to president dog-eater as a rat eared coward.

Lanceman on January 23, 2014 at 2:14 PM

ToMAYto. ToMAHto.

I’ve been calling him rat-eared too long to change now!

Happy Nomad on January 23, 2014 at 2:23 PM

Happy Nomad on January 23, 2014 at 2:09 PM

With O’Reilly doing his best bobble head impression saying “Yeah, the folks” over and over.

Cindy Munford on January 23, 2014 at 2:25 PM

buckichick1 on January 23, 2014 at 2:15 PM

They don’t care about your sympathy but they will take a large chunk of our future in the way of a too big to fail bail out.

Cindy Munford on January 23, 2014 at 2:26 PM

Need a little help here. Can you reference which medical device companies stand with obama? I can certainly tell you that mine does not.

HomeoftheBrave on January 23, 2014 at 2:01 PM


Here’s one good ex.
Many pharmas did too, and some doctors stood for pictures with the pajama-oaf-in-chief, the fake pictures notwithstanding (I know about the white coats).

Heh, followed by this.

Schadenfreude on January 23, 2014 at 2:26 PM

There’s no crying in insurance.

docflash on January 23, 2014 at 2:27 PM

The insurance companies got in bed with Obama on Obamacare so they get no sympathy from me.

buckichick1 on January 23, 2014 at 2:15 PM

Yeah, funny how their tune has changed once they figured out that the Obamacare trains were not going to be delivering thousands of young people to their health insurance gulags.

Happy Nomad on January 23, 2014 at 2:28 PM

HotB, here’s a grand example of the drug companies’ idiocy.

Schadenfreude on January 23, 2014 at 2:28 PM

I’ve been calling him rat-eared too long to change now!

Happy Nomad on January 23, 2014 at 2:23 PM

Yeah, well, he may be rat-eared and he may be a coward, but, uh,,,

What was that third thing again?

Lanceman on January 23, 2014 at 2:28 PM

And still Kathleen has her job….

cmsinaz on January 23, 2014 at 1:28 PM

Oh, come now cm. Surely you know that the evil witch Sebelius has Booboo’s little nuts in a death grip, no? If he cans her she goes on 60 Minutes and tells all.

“Every decision made came out of Booboo’s political operation. Pouffe, Axelhead and that skank Jarrett ran OBozocare, not me!”

Jaibones on January 23, 2014 at 2:36 PM

Allen West claims that OCare was intended to overload the welfare system a la Cloward-Piven.
http://therightscoop.com/boom-allen-west-makes-the-case-that-obama-intentionally-trying-to-overload-the-welfare-system-cloward-piven/

onlineanalyst on January 23, 2014 at 2:37 PM

RE: · Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year.

Not really true. IRS will be able to do that ONLY IF you are due a refund. If there is no refund due to you they can latch on to, then IRS cannot collect/withhold.

Insurance industry saw their stocks climb high in the past 2 years anticipating “profits” with HusseinCare implementation. Couldn’t happen to a better group of companies now with gains to be erased. I can’t picture Dems in Congress authorizing payment to insurance companies in the election year. Should be interesting to see this evolve.

riddick on January 23, 2014 at 2:38 PM

Indeed, riddick. Here’s a good article on topic.

Schadenfreude on January 23, 2014 at 2:42 PM

Too big to fail, Amirite? I mean, look how well that worked for GM!

Federal ‘co-ownership’ of insurers in 3…2…1…

orangemtl on January 23, 2014 at 2:44 PM

and then hotair will run out of material to bash the President on…that’s what you’re really afraid of, right?

nonpartisan on November 19, 2013 at 4:47 PM

But these Obamacare posts are about whistling past the graveyard, by next Novemeber Democrats will be openly running on the ACA. Mark my words.

libfreeordie on December 20, 2013 at 10:14 AM

Chris of Rights on January 23, 2014 at 2:52 PM

I will thank you not to refer to president dog-eater as a rat eared coward.

Lanceman on January 23, 2014 at 2:14 PM

Yea. And we probably should NOT refer to him as a dog-eating rat-eared sh1thead coward. Either.

Tsar of Earth on January 23, 2014 at 3:14 PM

Oh crap. Sirens.

Tsar of Earth on January 23, 2014 at 3:17 PM

And still Kathleen has her job….

cmsinaz on January 23, 2014 at 1:28 PM

She’s the last entry in the Dumb-Broad Politico File.
Anyone smarter would decline the job offer.
And to think, KS voters elected her twice to the Governor’s Mansion.
That welt will take a long time to disappear.

Another Drew on January 23, 2014 at 3:32 PM

riddick on January 23, 2014 at 2:38 PM

You touch on the only bright spot in this whole Kluster. No where to turn, no way to spin. The dems own this, lock, stock and barrel.

JusDreamin on January 23, 2014 at 3:36 PM

Happy Nomad on January 23, 2014 at 2:23 PM

Being kinda hard on rodents Happy.

JusDreamin on January 23, 2014 at 3:38 PM

O/T Sorry. Did anyone see that O’Reilly is going to interview The Won on Super Bowl Sunday? There won’t be a TV screen made that will fit that swelled head. Yuck.

Cindy Munford on January 23, 2014 at 1:53 PM

Which one?

There Goes the Neighborhood on January 23, 2014 at 4:00 PM

Moody’s is a bunch of RAAAAAAAAAAAAAAAAAAACISTS!!!

arik1969 on January 23, 2014 at 4:44 PM

There Goes the Neighborhood on January 23, 2014 at 4:00 PM

In this case I was speaking of O’Reilly. We know there will always be room to photoshop a halo on The Won.

Cindy Munford on January 23, 2014 at 4:57 PM

Who is surprised….. perfect scheme for oba-mao income redistribution. Scumbag, traitor, communist, illegal alien, and total liar.

ultracon on January 23, 2014 at 5:05 PM

Jeff Kuhner reported today that there are internal memos in the regime indicating panic that 404Care is in fact collapsing.

When I heard that I thought, “Gee it sure looks that way from out here. They need a memo?”

dogsoldier on January 23, 2014 at 5:37 PM

There Goes the Neighborhood on January 23, 2014 at 4:00 PM

In this case I was speaking of O’Reilly. We know there will always be room to photoshop a halo on The Won.

Cindy Munford on January 23, 2014 at 4:57 PM

Frankly, I’m surprised the massive egos of Obama and O’Reilly didn’t collapse gravity and form a black hole during the last interview.

There Goes the Neighborhood on January 23, 2014 at 6:23 PM