ACA insurers drop as “beautiful” GOP law hits
Insurers that provide ACA coverage are getting battered after Elevance Health warned on the outlook for the market.
Health insurers that supply coverage to Affordable Care Act marketplaces, where some 24 million Americans get their health insurance, posted the ugliest losses in the S&P 500 on Friday, after one such insurer, Elevance Health, reported disappointing Q2 earnings and said it was raising premiums for such policies.
Elevance was the worst-performing stock in the S&P 500 for most of the first half of the day, before it was overtaken by Molina Healthcare, a similar insurer. Centene, another provider of government-related insurance, also tumbled.
Elevance’s Q2 numbers, released after the close of trading Thursday, weren’t horrible. They only just fell shy of Wall Street’s consensus expectation ($8.84 vs. $8.91). Sales of $49.42 billion were a bit better than expected.
But the company signaled growing uncertainty about its future, in part due to the “big, beautiful bill” that passed the GOP-controlled Congress on a party-line vote and that President Trump signed into law early this month.
That bill lets the “enhanced subsides” for ACA marketplace buyers that began during the Covid crisis die at the end of the year.
According to the Congressional Budget Office, the loss of those enhanced subsidies is expected to knock roughly 4 million people off their ACA insurance in coming years.
This is a double whammy for insurers like Elevance. Obviously, it means fewer enrollees paying monthly premiums. But it also leaves insurers with a sicker client base and more expensive medical needs. (The people most likely to let their insurance lapse, even for reasons of affordability, tend to be those healthy enough to feel they can get away without coverage.)
“The biggest unknown for us right now is the policy uncertainties around the ultimate disposition of the enhanced subsidies in the individual ACA market,” Elevance CEO Gail Boudreaux told analysts after the company reported.
That said, the company is already raising the price of ACA individual insurance coverage to reflect the end of subsidies.
“We’ve already repriced products for rising cost intensity,” Boudreaux said.
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