Sixty-three percent of health insurers were unprofitable during 2014, the first year of full reforms under the Affordable Care Act, according to a report from the Commonwealth Fund.
The report evaluated 144 insurers to see whether their profit margins in the individual market increased or decreased from 2013 to 2014. Nearly half of insurers, or 47 percent, incurred losses in both 2013 and 2014. An additional 16 percent of insurers switched from incurring a profit in 2013 to incurring a loss in 2014.
“Medical claims, rather than administrative costs, were the main driver of the negative financial experiences,” the report explains. “Because both medical claims and administrative expenses increased more than premiums in 2014, health insurers’ overall operating profits (known as underwriting gain) diminished noticeably from previous years.”
Twenty percent of insurers turned a profit in 2014 after incurring a loss in 2013, and 17 percent of insurers turned a profit in both years. Insurers in this category saw a decline in their medical and administrative costs.