UnitedHealth may exit Obamacare individual exchanges

UnitedHealth Group said it may exit the Obamacare exchanges by 2017, which the website says is, “a potentially huge blow to President Barack Obama’s healthcare reform law”.

Affordability remains a significant concern for the population being sought by the health insurance exchanges and the companies selling products within them, especially for healthy consumers who don’t see the value in an insurance policy they don’t think they’ll use. UnitedHealth forecast net earnings of $7.10 to $7.30 per share in 2016.

The government estimates that just 10 million Americans will sign up for plans on the health care exchanges for next year, a small increase over the 9 million-plus enrollees it attracted for 2015 and far short of the 21 million that budget analysts initially projected.

Stephen Hemsley, UnitedHealth Group’s CEO, said in a news release that the company downgraded earnings projections for 2015 as growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data have signaled higher risks and more difficulties. Right now, Blumberg said insurers are trying to figure out pricing strategies for the individual market, a segment of the industry that experienced practically no competition before the exchanges opened to individuals.

The company still plans to expand into more exchanges, but medical claims have come in higher than expected on the exchanges overall, and its business in particular has deteriorated. The $425 million includes $275 million related to the “advance recognition” of losses it expects to incur in 2016.

As a result, the company said it cut its full-year earnings forecast to $6 per share from a previous range of $6.25 to $6.35.

Last month, UnitedHealth had struck a more optimistic note.

The nation’s largest insurer said it may have to drop out of Obamacare’s exchanges, a particularly gloomy harbinger for the law unless things turn around.

The company plans to evaluate during the first half of next year whether it would continue to offer Obamacare plans in 2017. The shares fell 6.6 percent to $109.5 in trading before USA exchanges opened. Anthem Inc.’s stock plummeted 6.8%, while Aetna Inc. lost 4%.