Outlook 2015: Insurers

Health insurers have lots of challenges ahead as they monitor the development of the healthcare reform law's marketplaces. Expensive specialty drugs, heightened competition for employer business, provider mergers, political and regulatory pressure to broaden provider networks and benefits, and political attacks on the reform law will be among the headwinds for insurers. But opportunity will still be plentiful in public insurance programs.

One of the biggest issues in 2015 is the Supreme Court's upcoming ruling in King v. Burwell, a case that will decide if premium subsidies are legal for millions in states using the federal exchange.

HHS has estimated that between 9 million and 10 million people will sign up for exchange plan coverage for 2015. Insurers will be watching for signs that employers are moving their workers out of group coverage into the exchange market.

A growing line of very high-priced specialty drugs, such as Gilead Sciences' Sovaldi and Harvoni therapies for hepatitis C, will remain a cloud over insurers' financial outlooks. However, they are aggressively pushing back with tactics such as Express Scripts exclusively offering AbbVie's hepatitis C drug after reportedly getting a big discount.

Insurers also will be monitoring the ongoing consolidation among hospitals and physicians, which insurers argue is driving up provider prices. To keep costs in check, narrow networks have proliferated. But those have triggered a backlash, particularly since insurers have not done a good job informing consumers which providers are in their networks.

Insurers and industry observers are anticipating a financially sound 2015 despite all these issues. Most of the publicly traded companies set aggressive goals for this year. Acquisitions may increase as more companies become comfortable with ACA strategy, Standard & Poor's analyst Joseph Marinucci said.

Insurers will be placing increased focus on their Medicare Advantage and Medicaid managed-care businesses. As in previous years, insurers surely will lobby hard early in 2015 to minimize Advantage rate cuts called for by the healthcare reform law.

Follow Bob Herman on Twitter: @MHbherman