"Obamacare" good or bad for OPKO?

Well, the vans will still have value if and when the ACA self-destructs. Insurance companies are use to dealing with backlash. This egalitarian utopia requires insurance companies (so far), and here are a couple big ones that are not exactly enthralled with their experiences (not to mention 12 of the 23 state exchanges have gone bust):

Blue Cross and Blue Shield of NC is expecting to lose more than $400 million on its first two years of Obamacare business. According to this morning’s News and Observer, “The dramatic deterioration in Blue Cross’ ACA business is causing increasing alarm among agents and public health officials.” In response to its bleak experience with the Obamacare exchange, the company has decided to eliminate sales commissions for agents, terminate advertising of Obamacare policies, and stop accepting applications on-line through a web link that provides insurance price quotes–all moves calculated to limited Obamacare enrollment.

What can we learn from North Carolina’s experience?

Obamacare Losses Made the Entire Company Unprofitable in 2014

First, these are not nickel and dime losses. BCBSNC reported an operating loss of $50.6 million in 2014–the first such loss in 15 years. Why? Because its Obamacare policies lost $123 million despite $343 million in various insurer bailouts (the so-called “Three R’s“–risk adjustment, reinsurance, and risk corridors).

What makes this shocking is that BCBSNC is the state’s dominant insurer, covering 72% of the large group market. If a deep-pocketed insurer such as this cannot make a go of Obamacare, that does not bode well for many smaller carriers who do not have large profits on other lines of business with which to absorb whatever losses are generated by policies sold on the Obamacare exchanges. Indeed, part of the explanation for why over half of the Obamacare co-ops have already failed is that they lacked the deep pockets of the largest and most experienced insurers in the business.

The fact that one of the nation’s largest insurers, UnitedHealthcare also has raised doubts about its ability to carry plans on the healthcare law’s exchanges beyond 2016 makes clear that this problem is not unique to North Carolina.

The Problem is Getting Worse, Not Better

A large carrier such as BCBSNC can afford to absorb a temporary hit to its profits. But the evidence in NC is that Obamacare losses are growing over time rather than shrinking–a clearly unsustainable business model. It may just be a matter of time before BCBSNC too abandons its Obamacare policies as a line of business.
Recommended by Forbes

Obamacare losses were $123 million in 2014. Year-end final figures for 2015 may not be announced until late February. But the most recent news suggests they will be at least double the losses experienced in 2014 [1]. This mirrors the experience of UnitedHealth, which recently announced it expects to lose more than $500 million on the Obamacare exchanges in 2016 — after already losing $475 million in 2015.

Because of its enormous losses, BCBSNC was able to convince the state’s insurance commissioner to allow a 32.5% average increase in its rates for the 2016 Obamacare policies now being sold. It remains to be seen how effective this is in forestalling future losses. However, as shown below, it should be obvious that higher premiums is going to limit the willingness of at least some Obamacare plan members to secure or maintain their coverage.

Source