UnitedHealth Group may abandon ACA exchanges

Tennesseans looking for low-priced health insurance under the Affordable Care Act may find fewer choices after 2016.

The announcement is particularly important to the Latino community who are the most uninsured racial and ethnic group in the United States.

Anthem Chief Executive Joseph Swedish said the company “remains committed to enhancing access to high quality, affordable health care for all of our members inside and outside of the insurance exchanges and continuing our dialogue with policy makers and regulators regarding how we can improve the stability of the individual market”. Those exemptions included, for example, people who lost their insurance, moved or suffered a hardship, such as an eviction or had their utilities turned off. United said it did not see a similar increase in costs for people who bought policies from private brokers or websites instead of the government marketplaces after open enrollment, suggesting the reason was partly that the company’s eligibility assessments were more thorough.

One of the largest health insurers in the country, Aetna Inc.

The ACA boosted hospital earnings before interest, taxes, depreciation and amortization by an average of 9 percent this year, and half of that came from patient enrollment through insurance exchanges created by the act, according to Joshua Raskin, an analyst with Barclays in NY.

“The market still needs to mature, he said”. “That’s the lesson here”.

These Medicaid carriers are also offering a few of the best pricing on the exchanges.

Regardless, because 10 million Americans are expected to get their insurance through the exchanges during this open enrollment, and rising penalties this year and next year could further increase enrollment, long-term thinking by insurers and investors could be rewarded.

Still, the companies’ exchange-related business isn’t without troubles-Aetna said on an earnings call earlier this month that individual business for its public-exchange and consumer efforts remained challenging.

In late October, Aetna’s CEO Mark Bertolini admitted that its Obamacare business is challenging, but that it could still be a big opportunity. They have been struggling, in particular, to attract enough healthy customers to their coverage to balance sicker patients who use a lot of health care. The health insurance firm will also record costs of $275 million in the fourth quarter of the current year.

“The overall market profile for the state exchanges is more negative that we had planned”, Hemsley said during the conference call. ‘We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself’. Unlike previous years, The Wall Street Journal reports, many people can’t avoid paying more by shopping around on the exchanges.

UnitedHealth also cut its earnings outlook on its weak view of the exchange plan business.

Anthem’s stock dropped by almost 7 percent and Aetna’s almost 5 percent on Thursday after news of UnitedHealth’s comments broke. HHS has said it expects about 10 million people will be enrolled at the end of 2016, compared with 9.1 million at the end of this year. The small health insurers, which focus on Medicaid, also said its exchange business was performing in line with its expectations. Insurance brokers in Colorado, such as UnitedHealthcare, helped recruit many who signed up with HealthOP for their medical coverage.

“The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017”, UnitedHealth said.

Obamacare has survived legal wrangling and Supreme Court rulings, but a decision by UnitedHealth Group (NYSE:UNH), America’s biggest health insurer, could prove to be its biggest challenge yet.