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Largest health insurers plan to increase public exchange participation

Posted On: Aug. 31, 2014 12:00 AM CST

Midway through the year, four of the five largest U.S. health insurers have signaled plans to increase their participation in public health insurance exchanges despite early profit declines and pricing uncertainty.

Additionally, analysts said health insurers have expressed little concern about a pair of federal lawsuits seeking to restrict the availability of premium subsidies for coverage purchased in the 36 federally facilitated public exchanges.

“I would have expected at least a question or two from investors about those cases, in terms whether it changes their strategies for 2015,” said Stephen Zaharuk, New York-based senior vice president at Moody's Investors Services Inc.

However, he said the lawsuits are predicted to last well into 2015, if not longer, and are unlikely to affect insurers' operational strategies for the coming year.

“I think insurers see this issue as disturbing and potentially problematic, but for now they're going to stay a steady course until they hear otherwise,” Mr. Zaharuk said.

Meanwhile, UnitedHealth Group Inc. said in July that it will enter public exchanges in as many as 24 states next year, up from the current four states in which it offers exchange-based policies.

“We've been told UnitedHealth expects the risk pool to get bigger and the new exchange enrollees in 2015 to generally be healthier, which makes for a better operating environment,” said David Windley, a Nashville, Tennessee-based managing director at Jefferies & Co. Inc.

Aetna Inc. and Cigna Corp. said they also plan to enter new public exchange markets in 2015. Both said they will offer exchange-based policies in Georgia, while Cigna said it also will enter public exchanges in Maryland and Missouri.

Humana Inc., which currently offers coverage through exchanges in 14 states, has not yet announced its plans for 2015.

WellPoint Inc., which will change its name to Anthem Inc. at the end of the year, already participates in public exchanges in all 14 states in which it operates.

Analysts said the name change highlights the company's focus on enhancing brand recognition in the public exchanges.

“It makes sense as the sector moves toward selling directly to consumers via public and private exchanges,” Mr. Zaharuk said. “In this environment, brand identification and familiarity is an important advantage.”