The trio of below stories clearly illuminate that:
- Medical trend in 2014 is about 6.5%.
- Medical trend in 2015 is probably going to be about 7.5%.
- The slowdown in cost increases is due to a weak economy and increased deductibles, copays and out-of-pocket costs under Obamacare.
- The carrier community is doing just fine under Obamacare. And,
- This is true despite the fact that the new exchange enrollees are sicker than anticipated.
Blue Cross - from Caroline Humer, writing at Reuters:
... WellPoint, which operates Blue Cross Blue Shield plans in 14 states, said it had spent 82.5 percent of premiums on medical claims, down from 84.9 percent a year earlier.
The company also said it still expected medical costs to rise about 6.5 percent this year. For next year, it is assuming the rate will increase, like Aetna.
"We're comfortable with our 6.5 percent for this year, plus or minus 50 basis points in the bias to the low end, but we're pricing for a level higher than that as we go into next year for core medical trend," Chief Financial Officer Wayne Deveydt said during a conference call with analysts.
WellPoint raised its earnings-per-share outlook for 2014 to $8.75 to $8.85, above analysts' expectations of $8.72 and looking to 2015, said analysts expectations of earnings of $9.15 to $9.30 per share were "reasonable placeholders." ...
... UnitedHealth Group Inc said on Thursday that its third-quarter net profit increased as patients' use of medical services remained "restrained," helping to keep the cost of health insurance claims down.
Americans have been using healthcare services lightly in recent years due to the economic downturn and as their out-of-pocket costs for doctor and hospital visits have increased. ...
UnitedHealth, the largest U.S. managed care company, reported earnings of $1.6 billion, or $1.63 per share, up from $1.57 billion, or $1.53 per share, a year earlier.
Analysts on average had expected a profit of $1.53 per share, according to Thomson Reuters I/B/E/S.
UnitedHealth said the percentage of medical claims that it spent on care fell by 90 basis points to 79.7 percent in the third quarter. At its commercial business, which includes health plans in which UnitedHealth manages the risk, its medical care ratio decreased 220 basis points to 79.1 percent. ...
And Aetna - also from Caroline Humer at Reuters:
[Aetna's] 2014 medical spending trend forecast is now for an increase at the high end of the 6 to 7 percent range. For 2015, it said it is pricing premiums based on an expectation that spending will accelerate by another 50 to 100 basis points.Hat tip to Dr. Ryan Kennedy for these stories.
Investors have been watching medical cost trends closely for any reversal of the low use of medical services in recent years.
Some hospitals have reported an uptick in use driven by a rebound in the economy. Others have said medical services use is up because of implementation of the national healthcare reform law. ...
Aetna said the percentage of premiums collected that it spent on covering medical services increased 0.5 percentage points to 81 percent in its commercial business, which includes new individual health plans. For commercial and government businesses combined, the ratio fell to 82.3 percent from 83.1 percent.
In 2014, Aetna began selling health insurance to individuals on the new healthcare exchanges created under the Affordable Care Act.
Aetna said it has almost 600,000 new insurance exchange customers and that they have higher costs per patient than expected. ...
Revenue rose 13 percent to $14.7 billion, slightly above analysts' expectations. ...
Aetna raised its 2014 earnings forecast to $6.60 to $6.70 per share from $6.45 to $6.60.
