Changes to ACA are 'credit negative' for insurers, Moody's says

Moody's Investors Service is warning that delays in implementation of the Patient Protection and Affordable Care Act are creating credit risks for insurance companies participating in the state and federal exchanges.

Specifically, a report issued Monday by Moody's analyst Steve Zaharuk argues that President Barack Obama's decision to allow insurance plans that don't comply with the requirements of the federal healthcare overhaul to be renewed for 2014 creates uncertainty about the customer pool for participating insurers. In addition, extending deadlines for purchasing coverage in the current open enrollment period and delaying the 2014 purchasing period have increased financial risks for firms.

“We expect additional changes as the administration addresses the operational and political problems that have arisen during the enrollment process,” Zaharuk writes. “Any further enrollment deadline extensions will exacerbate adverse selection and significantly increase the probability that these products will lower insurers' expected profits, or even result in financial losses for them.”

Federal officials announced on Sunday that they have met the operational goal of having the HealthCare.gov website functioning for the vast majority of users by the start of December. But concerns about the accuracy of information being provided to insurance firms continues to create anxiety about the federal exchange's reliability.

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