Health Insurers’ Pullback Threatens to Create Monopolies

via Wall Street Journal

Nearly a third of the nation’s counties look likely to have just a single insurer offering health plans on the Affordable Care Act’s exchanges next year, according to a new analysis, an industry pullback that adds to the challenges facing the law.

The new study, by the nonpartisan Kaiser Family Foundation, suggests there could be just one option for coverage in 31% of counties in 2017, and there might be only two in another 31%. That would give exchange customers in large swaths of the U.S. far less choice than they had this year, when 7% of counties had one insurer and 29% had two.

Many insurers are losing money on the health plans they sell through the exchanges, and the fallout is coming into focus. Companies including UnitedHealth Group Inc., Humana Inc. and Aetna Inc.have cited their losses in withdrawing from ACA marketplaces, as have smaller insurers that have been retreating, or even shutting down.

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States Start to Approve Steep Increases in Health Premiums

via Wall Street Journal

Aetna, the nation’s third-largest insurer, said on Aug. 15, that a second-quarter pre-tax loss of $200 million from its individual insurance coverage helped it decide to limit exposure to the health exchanges.
 

WASHINGTON—The first handful of states have released approved 2017 rates for people who buy health insurance on their own and the results so far are consistent with what many expected: There are significant increases in premiums for next year.

The Obama administration, seeking to reassure consumers who could be concerned by increases in more states in the coming weeks, released an analysis showing financial help from the government could soften the blow for people who qualified.

Some insurance regulators have begun announcing their approval of rate increases, including an average jump of 62% for the biggest plan in Tennessee and increases of around 43% in Mississippi and 23% in Kentucky for large carriers.

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MIT, NYU, Yale Sued Over Retirement-Plan Fees

via Wall Street Journal

The Massachusetts Institute of Technology, New York University and Yale University were sued Tuesday for allegedly causing participants in their retirement-savings plans to pay excessive fees, making them the latest to be targeted in a wave of similar litigation challenging the use of retail mutual funds in 401(k) and other retirement plans.

As with many of the previous 401(k) fee cases, the new suits allege the plans breached their duties under the Employee Retirement Income Security Act of 1974 by stocking their investment menus with retail mutual funds rather than lower-cost institutional versions of the same investments.

While plaintiffs in other 401(k) fee cases have challenged the use of retail mutual funds, experts say the three new cases are among the first to put the spotlight on 403(b) retirement plans sponsored by many universities. Similar to 401(k)-style plans, 403(b) plans are organized under a different section of the Internal Revenue Code. NYU and Yale offer 403(b) plans, while MIT offers a 401(k) plan.

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For Economy, Aging Population Poses Double Whammy

via Wall Street Journal

Planning to retire in the next few years? Please reconsider: The economy needs you more than you know.

Economists have long expected an aging population to hamper growth for the simple reason that it means a smaller labor force. But new research has identified a potentially more powerful impact: Rapid retirements deprive companies of critical experience and knowledge, which undermines productivity across the entire economy. Demographics may thus be a critical factor in why the current economic expansion, which began as the first baby boomers qualified for Social Security, is the weakest on record.

The findings are contained in a new paper by Nicole Maestas of Harvard University and Kathleen Mullen and David Powell of the Rand Corp., a think tank. Because the 50 states are aging at different rates, they were able to tease out the impact of aging on economic growth. Their conclusion: On average, every 10% increase in the share of state’s population over the age of 60 reduced per capita growth in gross domestic product by 5.5%.

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Anthem Projecting Losses on Affordable Care Act Plans This Year

via Wall Street Journal

Anthem Inc. said it is now projecting losses on its Affordable Care Act plans this year, a turnaround for a major insurer that had maintained a relatively optimistic tone about that business.

Anthem said it now believed it would see a “mid-single-digit” operating margin loss on its ACA plans in 2016, due to higher-than-expected medical costs. It expects better results next year, because it is seeking substantial premium increases.

Anthem’s financial performance on ACA plans had previously been a relative bright spot among major insurers, many of which continue to struggle. The second-largest insurer’s worsening results on that business highlight continued instability in the marketplaces that are at the heart of the Obama administration’s signature health law.

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New Online 401(k) Plans Disrupt Retirement Market

via Wall Street Journal

Disruption is coming to the 401(k) industry. Led by technology entrepreneurs and backed by venture capitalists, a crop of startups have launched online 401(k) plans in recent months with the aim of bringing robo-style automated investment services to small businesses, many of which offer their workers high-cost 401(k)s or no retirement savings plans at all.

The upstarts are pursuing a large market that has been relatively ignored until recently—a vacuum that has prompted some states to start requiring small businesses to offer retirement plans. Among companies with 100 or fewer employees—a group that employs about 42 million people, or one-third of the private-sector workforce—only 14% sponsor a retirement plan, according to an estimate by the Government Accountability Office.

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Aetna Backs Off Plans to Expand Its ACA Business

via Wall Street Journal

Aetna Inc. became the last of the five major national health insurers to project a loss on Affordable Care Act plans for 2016, underscoring concerns about the stability of the insurance marketplaces at the heart of the Obama administration’s signature health law.

Aetna said it would re-evaluate its participation in the 15 state exchanges where it currently sells plans, and cancel a planned expansion into more.

The moves come in the wake of recent confirmations by UnitedHealth Group Inc. and Humana Inc. that they would pull back sharply from the ACA’s exchanges amid deepening losses, and a disclosure by Anthem Inc. that it now expects losses on its ACA business in 2016.

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