A.M. Best Co. releases updated outlook for American health insurance sector in 2012

Health Insurance IndustryA.M. Best Co. has issued a briefing that provides a revision on its initial outlook for the United States Health Insurance sector in 2012, raising it from being negative to being stable.

Last year at this time, A.M. Best had confirmed its negative forecast for that sector, primarily over worries about the capability of that sector of the insurance industry to be able to put into place and maintain the various requirements for the Patient Protection and Affordable Care Act (PPACA), in addition to concerns over the chance that there would be margin compression.

Since then, though, a number of important considerations have been applied to the forecast, causing A.M. Best to alter its outlook and give the United States health insurance sector a stable prediction instead of a negative one.

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Among those considerations is the fact that throughout 2011, the industry as a whole seems to have managed the challenges presented by the new regulations quite well, and has already been able to put the early PPACA requirements into place, including a number of changes to benefits, a new medical loss ratio minimum, and altered process requirements for rate reviews; all of which were implemented last year.

Furthermore, the operating earnings have kept themselves on the plus side for two years in a row, primarily as a result of the wide modernization trend in utilization. Although this sector of the industry anticipated a compression of margins, what actually occurred was that the outcomes kept to the favorable side for the majority of insurers throughout last year.

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