Aetna, Other Insurers Say Obamacare Health Plans Performing as Expected

While the ultimate outcome of the debate is not yet clear, one fact is evident: Fewer enrollees than expected are signing up for health insurance through the exchanges and those that are aren’t healthy enough to offset the added expense of insuring people who previously lacked health insurance, many of whom have pre-existing medical conditions and other costly ailments.

As cost shifting among employer-sponsored health plans increases, a quarter of working adults with private health insurance can’t afford their health care costs, a new analysis shows. Aetna has about 1.1 million individual exchange members and Anthem has 824,000.

UnitedHealth, IHF’s largest holding, at 13% of assets, fell 5.6% yesterday.

The health insurance giant said that it expects to record $275 million in costs in the fourth quarter related to the policies sold on exchanges. Anthem, Aetna, Humana (HUM) and Cigna (CI) all sold off yesterday.

Peter Lee, executive director of Covered California, said he spoke with UnitedHealth officials Thursday and remains confident about the company’s continued expansion in the state.

“The market still needs to mature, he said”. Nor has the law’s focus on premiums – without any regard to other costs to consumers, such as deductibles – worked out in the real world, i.e. outside the offices of the Obama administration’s central planners.

“And that has been a profitable line of business for us, although it is a small part of our business”, he said.

Three of UnitedHealth’s for-profit competitors-Aetna, Centene, and Molina-told the Swiss financial services company UBS on Thursday that they remained confident about their exchange business, even considering short-term financial pressures.

Leaders of UnitedHealth had just said last month that they expected the exchanges to mature into a strong growth market.

“We call upon Senate Republicans to use reconciliation to send a full repeal of Obamacare to the president’s desk”, FreedomWorks CEO Adam Brandon said in a statement. No wonder insurers are beginning to think they can’t make it in that business much longer – and we’re only two years into this grand experiment.

Ben Wakana, a spokesman for the Department of Health and Human Services, said the statements were an indication that the overall marketplace has strength going forward.

“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.

UnitedHealthcare’s worries about its future in the government marketplace does not signal more serious problems with health care reform, said Sabrina Corlette, senior research professor at the Georgetown University Center on Health Insurance Reforms.

Insurers in many markets have struggled to find the right mix of healthy customers to balance the sicker ones since the exchanges opened for business in the fall of 2013. Earnings, adjusted for one-time gains and costs, came to 41 cents per share, surpassing Wall Street expectations.

UnitedHealth covers fewer than 550,000 people on the exchanges. It is a risk that comes in fresh markets where the insurer would not have been familiar with.

But Hempstead said this isn’t the first sign of retrenchment from a major insurer.

The recent negative news contrasts with the relief Obamacare supporters felt last summer when the Supreme Court effectively saved much of the Affordable Care Act by ruling that federal financial assistance could continue for customers of HealthCare.gov, the federal exchange that serves more than two-thirds of the United States.