Potential Major Blow for Obamacare As UnitedHealth Group Inc (UNH) Talks Of

UnitedHealth Group on Thursday said it expects to lose up to $500 million next year from its participation in exchanges providing insurance under the Affordable Care Act, known as Obamacare.

Aetna said its individual commercial business continued to perform in line with its expectations.

As reported by Reuters, the company said that weak enrollment and high medical costs for exchange members were taking too big a toll on its performance, adding that it will evaluate during the first half of 2016 on whether it will offer Obamacare plans in 2017. Aetna Inc. and the Blue Cross-Blue Shield carrier Anthem Inc. each reaffirmed on Friday, November 20, 2015 their 2015 earnings forecasts.

Aetna and Anthem also backed their profit outlooks for the year on Friday after UnitedHealth cut its view Thursday.

During the Obamacare debate, Democrats were divided over whether they ought to pursue a comprehensive overhaul of federal health insurance policy or if they should instead pass a “skinny bill”, an incremental, stripped-down version of Obamacare that would just include popular provisions like expanding Medicaid and imposing new consumer-friendly regulations on insurers.

For UnitedHealth, it marks a dramatic shift after the Minneapolis company said last month that it was expanding into 11 more exchanges next year. The basic guarantee of access to insurance has a chance to be saved if Congress rewrites the law to give much more room for insurers to tailor their offerings to fit the varying needs of people in the market, not the rigid mandates of the law. Like UnitedHealth, neither has had financial success there – Aetna has said it’s losing money, while Anthem is making less than it would like. It has also said that it is thinking of actually withdrawing from it. As a whole, she doesn’t see United’s warning and possible exit as a bad omen for the exchange markets.

UnitedHealth executives told investors in a conference call that insurance holders who sign up after the open enrollment period are particularly expensive. That’s down from its previous forecast for $6.25 to $6.35 per share.

Several nonprofit health insurance cooperatives established to compete with insurers on the exchanges announced earlier this year that they would fold.

Competitors’ mixed-bag resultsAetna and Anthem are also struggling to make money on the marketplaces, but neither of them appear willing to walk away from Obamacare – at least not yet. It is a risk that comes in fresh markets where the insurer would not have been familiar with.

“This year, people looking for coverage in the marketplace continue to have a robust number of plan choices and as the data shows the marketplace is stable, vibrant and a growing source of coverage for new consumers”. Over time, as the exchanges evolved, the subsidies, and the open enrollment limitations, started to look a lot more important than the penalty.

Anthem and Aetna both have big merger deals on the table to be reviewed by the government-Anthem has an agreement in place to buy Cigna Corp., while Aetna Inc. has an agreement to buy Humana Inc.

Nichols, Gupte and other analysts agree with the industry’s trade lobby, which says one thing the administration could do is make good on a promise to pay insurers under a temporary program created to redistribute profits from a few insurers that did especially well to offset losses others experienced in the marketplace plans.

“The reality is we continue to see more people signing up for health insurance and more issuers entering the marketplaces”, Ben Wakana, a spokesman for the Department of Health and Human Services, said in an e-mail.