The Affordable Care Act individual market is not in a "death spiral" as most insurance companies reported better results in 2016 than in 2015, but insurers still need a couple of years to generate desired margins, according to a report from S&P Global Ratings.
S&P said the individual market could be manageable for health insurers, noting that most Blue Cross Blue Shield insurers saw a marked improvement in their operating performance in 2016.
The rating agency expects insurers to get closer to break-even margins in 2017. Premium increases could slow down in 2018, according to the report.
But it also cautioned that its predictions may not hold if lawmakers make significant legislative changes to the health insurance market. Insurers are expected to report positive margins in 2018 if there are only a few fixes to the market instead of an overhaul, according to the report.
Some counties in states such as Tennessee and Iowa may have no insurer on the exchange in 2018. S&P warned that more insurers could exit the market and premium hikes could be higher than expected if uncertainty on the future of the ACA and cost-sharing subsidies remains.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.