Obamacare will hurt expat business, claim insurers

US health reform will hurt insurers’ expatriate business, according to Kaiser Health News’ Phil Galewitz and Christopher Weaver. At issue is the “medical-loss ratio” (or MLR), which requires insurers to spend a minimum 80% of premium revenues on health costs–leaving only 20% for administrative and other expenses. Insurers’ expat businesses were previously exempt from the rule, but that exemption will expire at the end of 2011.

International health insurers such as Cigna and Aetna said the law fails to account for the higher costs associated with insuring expatriates: arranging for emergency evacuation cover, building partnerships with local care providers and the cost of foreign currency transactions, to name a few. Their argument is the MLR will hit profitability hard.

Galewitz and Weaver quoted Cigna spokeswoman Gloria Barone Rosanio as saying, “this hampers our ability to compete in the global marketplace.” Cigna may ship jobs overseas to avoid these restrictions if the new rule goes into effect. The company currently provides health cover to 800,000 expatriates (the most of any US insurer). Aetna’s expat health insurance plans have around 400,000 members.

What’s more, wrote Galewitz and Weaver, the Obama administration doesn’t seem particularly interested in resolving the issue:

The insurers said they’ve been unable to convince congressional leaders to change the health law as they have requested. They’ve also been talking to officials at the White House and the Department of Health and Human Services. If Cigna carried through on its threat to move jobs overseas, it would be an embarrassment to Democrats, who have been attacked by Republicans for passing the “job-killing” health care law.

Companies mentioned

Aetna is a US-based health benefits company. It offers a broad range of products to both individuals, employers, university students and expatriates (through Aetna International). Aetna delivered strong first quarter results in 2011 (earnings per share of USD 1.43). Nonetheless, analysts expect this to drop off rather sharply through the rest of 2010 – consensus estimates forecast earnings of USD 1.06 in Q2 and USD 1.03 in Q3. http://www.aetna.com


CIGNA is a global health service company serving multinational employers, international organizations and individual expatriates. It offers products in 29 countries and has some 66 million customers worldwide. A publicly traded company, CIGNA shares have been on the rise since the second half of 2010. Nonetheless, the company’s earnings are forecasted to remain relatively flat over the next two years. http://www.cigna.com