Although health insurers have seen their revenue rise under the Affordable Care Act, much of the growth they've experienced has been unprofitable, according to The Wall Street Journal.
A sharp rise in new membership in individual plans as well as Medicaid plans private insurers administer for the government has expanded the industry's total U.S. revenue from $641 billion in 2013 to $743 billion in 2014, according to analysis by McKinsey, WSJ reported.
However, health insurers lost a total of $2.5 billion, or an average of $163 per consumer enrolled, in the individual market in 2014. Many are also expecting to lose money on their 2015 marketplace business.
Here are five key points on how health insurers — large and small — are struggling under the ACA.
1. The ACA expanded the individual market, requiring insurers to sell health plans to all consumers and prohibiting them from charging higher rates or discriminating against those with health conditions. Many insurers inaccurately predicted their costs, not setting the rates high enough to cover the cost of caring for everyone they enrolled, according to the report.
2. Many insurance small insurance startups are shutting down, including many of the original 23 co-ops formed under the ACA.
3. Larger companies were able to weather the losses, but this year's premium increases create the possibility for sticker shock among consumers, despite the availability of premium tax credits to help cover costs.
4. The general consensus among insurers is that a consumer-oriented market will continue to grow, including emerging private Medicare plans. Consumer-based approaches developed there are expected to traverse into the larger employer-sponsored business, according to the report.
"The ACA is an accelerant, or a catalyst" for change, Brad Wilson, CEO of Blue Cross and Blue Shield of North Carolina, told WSJ. "The market is, and will continue to evolve to, a consumer-centric, retail type."
5. Many insurers are making changes to their healthcare provider networks. For instance, Health Care Service Corp., which owns Blue Cross and Blue Shield plans in five states, will stop offering preferred provider organization plans on the exchange in Texas next year, while in Illinois it will no longer offer the PPO that featured the most expansive selection of hospitals and physicians.