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New data from the Obama administration last week shows that health insurers in Indiana will enjoy more than $552 million in tax credit payments this year for the customers they’ve signed up via the Obamacare exchanges.
On top of that, three Indiana insurers—Anthem, MDwise and Managed Health Services—are due to receive more than $1.7 billion in payments via the expanded Healthy Indiana Plan, known as HIP 2.0, according to estimates by the Indiana Family and Social Services Administration.
That flood of money is showing up on those insurers’ financial statements—and helping boost profits at Indiana’s hospital systems.
For example, Indianapolis-based MDwise Inc., which has a contract with the state of Indiana to administer claims for the state Medicaid programs, including HIP 2.0, saw its customer rolls balloon by an extra 75,000 during the first six months of the year, according to figures reported to the Indiana Department of Insurance. Some of that was also due to MDwise receiving a contract to administer benefits for aged, blind and disabled Hoosiers for the Medicaid program.
That 26 percent surge in customers generated an extra $45.8 million in premium income during the first half of the year—or a 16 percent jump over the same six-month period last year. MDwise pulled in total premiums during the first half of the year of $326.8 million for handling benefits for nearly 360,000 Hoosiers.
Meanwhile, MDwise’s other business—providing commercial insurance via the Obamacare exchanges—actually shrunk this year, due to increased competition on the exchanges and due to about 40,000 lower-income Hoosiers switching from exchange coverage to HIP 2.0, once it became available in February.
MDwise Marketplace Inc. saw its exchange enrollment decline by 25 percent, from nearly 22,900 at the end of 2014 to 17,100 on June 30. But MDwise Marketplace’s exchange policies still generated $58.6 million in premium income and a healthy $6.9 million in dividend payments to the company’s owners, the Indiana University Health and Eskenazi Health hospital systems.
Indianapolis-based Anthem’s second-quarter results have yet to be made publicly available by the National Association of Insurance Commissioners. But Obamacare, formally known as the Affordable Care Act or ACA, is boosting finances across the health industry, according to a report published Monday by Fitch Ratings, a bond rating agency.
“Due primarily to the ACA’s expansion of Medicaid coverage, revenue growth was especially strong among health insurers … that focus on the Medicaid market,” wrote Fitch analyst Mark Rouck. “Revenue growth among companies with large commercial membership was solid; generally in the high single digits.”
Through June 30, there were 167,261 Hoosiers that were covered by private health insurance policies purchased on the Obamacare exchange, also known as the federal marketplace. The vast majority of those, 146,160, received a tax credit to reduce the cost of the insurance.
Obamacare, by passing new rules for insurers, raised the cost of insurance by 24 percent over what it would have been without the law, according to a 2014 analysis by a Yale University economist.
Obamacare’s tax credits in Indiana are averaging $3,780 per person this year, according to the report by the health and human services department, meaning the total amount of tax credits that the government will forward to health insurers is $552.5 million.
For HIP 2.0, the extra money from Obamacare has allowed enrollment in the program to expand from 40,000 last year to more than 315,000 this year. State leaders projected in 2014 that the federal government would spend nearly $1.6 billion in the first year of the expansion, with the state government chipping in about $150 million.