Aetna says individual Obamacare business performing as expected

According to a release on Thursday from United Health, the Minnesota-based company “will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017”.

The news had dragged down shares of health insurers and hospital operators on Thursday.

While UnitedHealth has been slower than a few of its rivals to sell Obamacare policies, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities. The company says that it has sustained heavy losses in selling insurance on the Obamacare exchanges.

Anthem is “continuing our dialogue with policymakers and regulators regarding how we can improve the stability of the individual market”, he said. UnitedHealth’s three biggest competitors, Aetna, Anthem, and Cigna, have also announced that they will not be offering health insurance policies on a number of the Obamacare exchanges across the country.

Open enrollment for locking down 2016 Obamacare coverage ends December 15. The health insurance firm will also record costs of $275 million in the fourth quarter of the current year.

When the Affordable Care Act passed five years ago, government prognosticators and private research organizations projected between 21 million and 27 million exchange enrollees in 2016. UnitedHealth wound up dropping 5.6 percent, or $6.57, to close at $110.68.

“We’ve been very clear with the administration about the serious challenges facing consumers and health plans in this Exchange market”, Marilyn Tavenner, CEO of trade group America’s Health Insurance Plans, said in a statement.

‘If [UnitedHealth] can’t make money on the exchanges, it seems it would be hard for anyone, ‘ Katherine Hempstead, insurance coverage chief at the Robert Wood Johnson Foundation, said in an article Friday in USA Today. (NYSE:AET) announced on Friday that Obamacare healthcare plans have performed as expected for the company in 2015. Also, the expected move has raised questions on how viable is President Obama’s signature health law.

UnitedHealth expects to book an operating loss of slightly more than $700 million this year, largely from its exchange business. Kaiser covers about 450,000 people in nine exchanges, and a spokeswoman said they are confident that the business is financially stable.

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.

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

None of this is to say that there aren’t improvements the government could make to help insurers navigate the exchanges. It has also said that it is thinking of actually withdrawing from it. Which raises the worrying possibility that only two years in, people have figured out how to game the special enrollment process so that it’s safe for them to go without insurance, and then sign up for coverage if they get sick.

An exit could, however, affect prices on the exchanges.

The announcements came the day after UnitedHealth cut its earnings forecast and said it might exit the ACA exchanges in 2017.

And the Obama administration itself last month predicted 2016 enrollment would be less than half of what the Congressional Budget Office predicted in March.

For insurers, that section of the population represents critical group as their general lack of health problems allows their premiums to pay for the care of others.

UnitedHealth executives told investors in a conference call that insurance holders who sign up after the open enrollment period are particularly expensive.