Health insurers get some big presents in the Senate's health overhaul bill _ about 20 million new customers and no competition from a new government plan.
Taking advantage of those boons might take some time, though.
The bill imposes hefty new taxes and coverage rules that will pinch insurers by forcing them to cover more sick people without gaining enough healthy, lower-cost customers, industry insiders say. The industry is also worried the bill doesn't do enough to control health care costs.
It's a matter of figuring out how to make those new customers profitable, analysts say.
"There's opportunity," Miller Tabak analyst Les Funtleyder said. "Where the rubber meets the road is can you access that opportunity? At least some of them will figure out how to do it."
The Senate bill is much more favorable to insurers than a similar bill passed in the House that contains a government-run option for consumers seeking individual insurance, something insurers have fought hard. They worry that a government-run plan that sets rates below market prices would pose unfair competition.
Though the Senate bill still has to be reconciled with the House bill, most observers believe the government-run plan, often called a "public option," will disappear because it lacks Senate support.
Both bills call for the creation of insurance exchanges that help people buy coverage. Insurers likely will lose money on business from those exchanges, said Robert Laszewski, a former insurance executive and president of Health Policy and Strategy Associates, a Virginia-based health care consultant.
It's a tradeoff: People without insurance would be required to buy it _ in some cases, subsidies will help them pay for it _ or face fines if they don't. Insurers, in turn, would no longer be able to deny coverage based on pre-existing conditions such as diabetes or cancer.
But the proposed fines are too weak and the subsidies too meager to truly motivate people to buy insurance, Laszewski said. This means the people most motivated to buy coverage through these exchanges will be those who already have health problems _ who are money losers for insurers.
Insurers need a mix of healthy people enrolled in their coverage to help balance out claims they pay for patients who use more insurance.
The Senate bill calls for fines for people who do not purchase coverage and are not exempt from a mandate to buy it. They start at $95 in 2014 and rise to $750 by 2016.
That's a lot more affordable than what some people would pay for insurance. A sliding scale of subsidies will help people or families with incomes up to 400 percent of the federal poverty level, or $88,200 for a family of four this year. But a family of four with income of $65,000 would still have to pay nearly 10 percent of that income, or $6,500, toward coverage.
"There aren't a lot of families with an extra $6,500 in their checking account," Laszewski said. "The problem with this bill is the subsidies are really quite modest, and there really aren't any penalties."
An ideal bill for insurers, he said, would pair better subsidies for the uninsured with higher penalties that motivate people to buy coverage and get more healthy people into the risk pools.
The Senate bill hurts managed care companies in other ways. Insurers use a person's age and other variables to figure out the price of an individual insurance policy. Older people often have to pay more because they tend to generate more claims. But the Senate bill limits how much more insurers can charge for older customers.
That means people under age 30 likely will see a "substantial increase" in the cost of a policy _ making them less inclined to buy insurance _ while older people will see a smaller decrease, said Brad Fluegel, chief strategy and external affairs officer for WellPoint Inc., the nation's largest health insurer based on membership.
The Senate bill also calls for the industry to pay annual fees for the plan that start at $2 billion in 2011 and increase to $10 billion by 2017. Analysts say costs like these will be passed to consumers because insurers want to protect profit margins, which are generally thinner than other health care companies like drugmakers.
"I think we're going to be discussing health care reform continuously for the next several years as we try to fix all the things that are broken with this existing bill," Fluegel said.
Added up, insurers say the bill would mean higher premiums for consumers and likely for employers who buy coverage. And that's on top of hikes spurred by rising medical care.
The stock market no longer seems worried. Shares of the five largest managed care companies have risen more than 120 percent, on average, since they bottomed out in early March. In contrast, the Standard & Poor's 500 index has increased about 63 percent over the same span.
Investors had big worries when the debate picked up steam last spring, but stocks started climbing as they realized "doomsday scenarios" such as a government takeover would not happen, Funtleyder said.
He thinks insurers will learn to live with the overhaul and eventually benefit from it. They should be able to adjust their prices to accommodate taxes, fees and the new regulations once they understand the claims their exchange customers will generate.
"It's kind of tricky, at least in the beginning."