Analyst foresees managed care growth in 2014

September 16, 2013

Major health insurers are in line for another year of growth, as the health care overhaul implements key elements in its push to cover millions of uninsured people, according to a Barclays analyst.

The federal law will expand the state-and-federally funded Medicaid program in several states next year. State-based health insurance exchanges also will begin, and uninsured people will be able to use those to buy coverage with help from income-based subsidies or tax credits.

The government also will continue to reduce funding for Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled people.

Analyst Joshua Raskin said in a research note late last week that the Medicaid expansion should help drive enrollment growth next year, and the exchanges will wind up being a "very small" influence.

Major companies in the managed care sector include UnitedHealth Group Inc., Indianapolis-based WellPoint Inc. and Aetna Inc.

Raskin said next year will look a lot like this year, and changes to the health care system will phase in over many years.

Experts and Congressional forecasters expect Medicaid enrollment and growth from the health exchanges to unfold over several years as people learn about the coverage options and how to sign up. A Supreme Court ruling last year made the Medicaid expansion optional for states, and enrollment in that program also will grow later if states that opt out of the expansion reverse course.

"We see challenging reimbursement in Medicare Advantage, but not enough to derail growth in that segment next year," Raskin wrote. "Overall, we see a year of growth for the managed care companies in 2014."

WellPoint shares rose 57 cents Monday morning, to $89.66 each.



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