But Capitalization Remains Strong
NEW YORK (Standard & Poor's) Jan. 12, 2015–The Blue Cross Blue Shield insurance companies (the Blues) were among the first insurers to participate strongly in the U.S. public exchanges. In most states they ended up with a dominant share of exchange enrollees at the end of the first annual enrollment.
This additional scale is helpful, but the health acuity of the newly insured members is uncertain, according to a report by Standard & Poor's Ratings Services released on Jan. 8, 2015, titled, Singing The ACA Blues: U.S. BCBS Plans Stand Strong In The Post-Reform Insurance World . "We expect the Blues' profitability in general to be constrained in 2014 and 2015," said Standard & Poor's credit analyst Deep Banerjee. But no near-term ratings actions are planned for most of them because we expect the Blues to maintain their capitalization strength and benefit from a strong brand and leading positions in local markets. But we have barely finished listening to the first verse of the ACA blues.
In the longer term, the Blues' credit quality will suffer if they are unable to turn around the individual business, regenerate capitalization levels, and maintain their strong hold on local commercially insured marketplaces. Whether they will end up humming "Let the Good Times Roll" or "Hard Rock Blues" remains to be seen. Under Standard & Poor's policies, only a rating committee can determine a credit rating action (including a credit rating change, affirmation or withdrawal, rating outlook change, or CreditWatch action).