Obamacare changes a negative for insurers: Moody's

Moody's is getting even moodier about Obamacare.

The credit rating agency on Thursday warned that two recent proposals to change the rules of the Affordable Care Act, yet again, would be "further credit negatives for health insurers."

One proposed change would be to pressure insurers to increase the size of medical provider networks offered to their customers. The other would be to allow people insured by plans that are no longer compliant with ACA standards to maintain that coverage through 2016.

President Barack Obama in September 2013 in New York City.
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The proposals threaten not only the bottom lines of insurers, but also the pocketbooks of consumers, who would face likely higher premiums as a result, Moody's said.

The rating agency noted that the developments follow announcements from insurance giants Aetna, Cigna and Humana that they "expect to earn negative margins on their [Obamacare health insurance] exchange business in 2014."

(Read more: Obamacare enrollment rises as more youths join)

It also said insurers who sell health coverage to the small employer market will face "more complications." This follows the administration's announcement on Monday that it will phase in the requirement for employers with 50 or more full-time workers to offer health insurance to their employees by 2015.

Now, that mandate will not apply to employers with 50 to 99 full-timers until 2016.

"What was going to be a challenging selling seasons for insurers in the small group market just became more challenging," wrote Stephen Zaharuk, senior vice president of the U.S. insurance team at Moody's Investors Services, in the analysis.

ACA enrollment increases to 3.3 million

Moody's latest negative analysis about the effects of the Obamacare rollout comes three weeks after the company changed its outlook for health insurers from "stable" to "negative." The agency said ongoing implementation of the Affordable Care Act provisions was continuing to create uncertainty in the industry.

"Everything we've seen and heard so far continues our negative outlook," Zaharuk told CNBC in an interview Thursday. "There's nothing to contradict what came out before."

(Read more: Obamacare delay: Small employers get reprieve)

Last week, the Obama administration proposed tougher reviews for insurers looking to sell Obamacare plans on HealthCare.gov, the federally run insurance exchange that offers coverage in 36 states.

Those reviews would compel insurers to list the medical providers in their plans' networks, with the implication being that federal regulators could reject the plans for not having enough providers, or the right mix of providers in the plans.

The majority of Obamacare policies are so-called narrow network plans, containing fewer providers on average than coverage plans sold to employees of large companies or outside the Obamacare exchanges. The narrower networks are credited with holding down premium costs, but have been criticized for limiting provider choices to consumers.

"In our view, forcing insurers to expand their networks will result in higher premiums that will further discourage enrollment by the younger and healthier population," Zaharuk wrote in Moody's analysis. "If the trend were to continue, these products would eventually become unsustainable."

Robert Zirkelbach, a spokesman for the industry lobbying group America's Health Insurance Plans, said, "It is important to ensure patients can continue to benefit from the high-value provider networks health plans have established, which are helping to improve quality and mitigate cost increases for consumers as the new health care reforms are taking effect."

(Read more: Doctors fear 'crushing' costs from code switch )

Moody's in December had said the decision by the administration to allow people covered by non-ACA-compliant plans to keep them through the end of 2014 would have "a negative effect on the risk profile of the exchange pool as healthier, younger members took advantage of this waiver."

That's because those younger adults may have otherwise bought coverage in Obamacare plans sold on the exchanges, which would have made those plans' risk pools more stable, and less likely to lose money for insurers compelled to pay out more in benefits than they took in in premiums.

Moody's on Thursday said the proposal to extend that waiver until 2016 "will exacerbate the issue and will likely result in higher premiums for exchange policies with an insured population that will be less healthy and less profitable for insurers."

"Finally, the delay of the employer mandate until 2016 will cause complications for insurers and confusion for employers and employees," Moody's said. "Insurers have already begun to develop and sell small group compliant policies to employers. Now that these employers are no longer required to meet the requirements of the ACA for 2015, they may want to retain their existing policies for another year, forcing insurers to resurrect plans they had intended to discontinue."

When asked by CNBC about the potential negative financial impact to insurers directly from that employer mandate phase-in, Zaharuk said the change "is the hardest one to model out."

(Read more: What's behind AOL's Obamacare blame game )

He did say, however, that two more hypothetical changes to Obamacare worry both Moody's and insurers.

Those changes are extending the deadline for open enrollment in Obamacare policies beyond the current March 31 deadline, and suspending the tax penalty most Americans face next year if they do not have some form of health insurance by March 31 this year.

That tax penalty is considered a key motivator for uninsured people to buy coverage through the government-run Obamacare exchanges, and in turn to strengthen the risk pools of the plans sold on those marketplaces.

Republicans opposed to Obamacare have called for the elimination of the tax penalty, and some Obamacare supporters have called for extending the enrollment deadline to boost participation in the plans. On Wednesday, a spokeswoman for Health and Human Services Secretary Kathleen Sebelius firmly rejected the suggestion that HHS would consider either proposal.

Sebelius on Wednesday, in announcing that 3.3 million people had enrolled in Obamacare plans as of Feb. 1, noted that younger adults are now signing up at a faster rate than they had been. However, the percentage of younger adults who are enrolled is just 25 percent—15 percent lower than a target some experts have said is ideal for the plans' risk profile.

Zaharuk said the increased participation by younger adults in the plans is "good news."

But so far, it's not enough to offset Moody's overall negative outlook for insurers selling the Obamacare plans.

In its analysis last month, at a time when young adults comprised 24 percent of Obamacare enrollees, Moody's noted, "The demographics of those enrolling in individual products through the exchanges is a key factor in Moody's outlook change."

Aetna, when asked for comment on Moody's analysis, noted that "Moody's outlook for Aetna's ratings remain stable."

" Individual health insurance is a small portion of Aetna's business, representing approximately 3 percent of our 2013 membership and operating revenues," an Aetna spokeswoman said. "We don't expect our exposure to the individual insured business to change materially in 2014."

By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan