UnitedHealth says losses may force it out of Obamacare exchanges

Suffering loss of profitability from the individual insurance policies sold on the exchanges, the health insurer decided not entertain such losses and even said that might exit this unprofitable market completely by 2017. It’s taking actions to scale back Obamacare plans in 2016 and isn’t sure if it’ll stick around for 2017.

Democrats could also face pressure if the UnitedHealth and other parties depart the exchanges because less competition could mean higher insurance premiums.

This announcement from UnitedHealth is unexpected.

“If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise”, Skolnick said. This was primarily because the added customers tended to use more medical care than it would have expected.

Thrivent Asset Management Analyst David Heupel says investors never welcome a projected drop in earnings, but exchanges are only a small portion of UnitedHealth’s portfolio.

In October, the U.S. Department of Health and Human Services forecast about 10 million people would have plans next year, significantly below industry expectations of 20 million.

Insurers expect several new regulations to drive healthier consumers onto the exchanges over the next few years.

ObamaCare has turned into a bait-and-switch scheme leaving many insurers in the red rather than with a windfall of profitable new patients. “The reality is we continue to see more people signing up for health insurance and more issuers entering the marketplaces”.

The announcement may lead people to look out for other coverage. “Today’s statement by one issuer is not indicative of the marketplace’s strength and viability”.

That has been one of the complaints recently by Blue Cross and Blue Shield of Louisiana.

“We think it’s way too early to call it quits on the ACA and on the exchanges”.

‘We can not sustain these losses.

Health plans are particularly upset that the administration paid out claims in a program created to stabilize the marketplace at less than 13 percent of what insurers requested.

“The Obamacare business model doesn’t work”, said Robert Laszewski, president of consultancy Health Policy and Strategy Associates in Virginia. UnitedHealth initially sold coverage on only 4 exchanges, before expanding to 24 this year.

Insurers had criticized the exchanges before they opened, due to technology problems with the federal government-run HealthCare.gov website and concerns about the cost of covering customers who might be sicker than the general population. “Deductibles are up the roof, networks [of health providers in plans] are narrowing”. “These people are in denial”.

The news sent shockwaves through an already anxious healthcare marketplace, less than a month into this year’s open enrollment period for ObamaCare plans.

But the most worrisome thing here is what UnitedHealth said about people only paying for insurance during the exact moments they need insurance.

“This has been a very challenging market; it’s still a market in transition”, said Krusing. The hope was that those programs would act as training wheels for Obamacare in its first few years of implementation, but after that, the insurers were supposed to be able to thrive on their own. The payouts were low because more insurers lost money than made money, though the US has promised to make up the payments in future years.

“The exchange business is unprofitable, ‘”Guertin said”.

UnitedHealth chief executive Stephen Hemsley said market data points “to an environment that is declining and likely to continue in that direction into next year”.