Moody's Investors Service downgraded in its outlook for the U.S. health insurance sector to negative from stable, because of the uncertainty created by Obamacare.
"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,"
Moody's Senior Vice President Stephen Zaharuk said in a statement.
"The past few months have seen new regulations and announcements that impose operational changes well after product and pricing decisions were finalized."
Editor’s Note: 250% Gains Bagged Using Secret Calendar (See Video)
For example, in November, the Obama administration permitted insurance companies to allow customers to keep their old policies after the companies had closed an estimated 4 million to 5 million of those policies to comply with the Affordable Care Act.
Moody's said sluggish enrollment in Obamacare by young adults also contributed to the downgrade.
Only 24 percent of enrollees so far in the individual insurance exchanges are in the 18-to-34-year-old group, Moody's noted. That number may have to rise to 40 percent to keep premiums from going up, it says.
"Moody's expects reduced net earnings margins of approximately 2 percent in 2014, compared to an average of 3 percent the previous year, and smaller overall membership growth of approximately 1 percent, down from 3 percent in 2013, with company strategies continuing to focus on revenue and income diversification," the ratings agency said.
A new study from the center-right American Action Forum doesn't see any improvement in young adult sign-ups this year.
"We find that after accounting for subsidies and cost-sharing, six out of seven uninsured, young adult households will find it financially advantageous to forgo health coverage, and instead pay the mandate penalty and cover their own healthcare costs" in 2014, the study noted.
Editor’s Note: 250% Gains Bagged Using Secret Calendar (See Video)
Related Stories:
© 2026 Newsmax Finance. All rights reserved.