Many have addressed the issue of uncertainty created by the implementation of Obamacare and noted the impact that may have on a variety of areas, including for the health insurance industry.

On Thursday, Moody’s Investors Service downgraded its outlook for health insurers, citing such uncertainty.

From Moody’s:

Moody’s changed the outlook for US health insurers to negative from stable, as implementation of the Affordable Care Act (ACA)continues to create uncertainty for the industry, says Moody’s Investors Service in its new industry outlook “US Healthcare Insurers: Outlook Changed to Negative from Stable.”

The ACA—signed into law in March 2010—seeks to increase affordability of health insurance and expand both public and private insurance coverage through a number of mechanisms including exchanges, mandates and subsidies.

“While we’ve had industry risks from regulatory changes on our radar for a while, the ongoing unstable and evolving environment is a key factor for our outlook change,” said Stephen Zaharuk, a Moody’s Senior Vice President and author of the report. “The past few months have seen new regulations and announcements that impose operational changes well after product and pricing decisions were finalized.”

Uncertainty over the demographics of those enrolling in individual products through the exchanges is a key factor in Moody’s outlook change, says the rating agency. Enrollment statistics show that only 24% of enrollees so far are aged 18-34, a critical group in ensuring that lower claim costs subsidize the higher claim costs of less healthy, older individuals. This is well short of the original 40% target based on the proportion of eligible people in this cohort, says Moody’s.

Moody’s also indicates that “the impact of the industry assessment tax that begins in 2014 is unclear.”  Some insurers may have already factored this into their premium calculations, but as Moody’s notes, “the amounts received may still be insufficient to cover their share of the assessment.”

The downgraded outlook from Moody’s also comes on the heels of other news that the administration will replace the lead contractor for after fears that it would not be able to meet its deadline to complete remaining development work.  A recently released document showed that officials worried that if remaining functionality isn’t complete by mid-March 2014, there could be serious risks for the entire health care reform program.


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