UnitedHealth may look to quit exchanges in 2017

There are 499 markets for Obamacare plans, but last year’s least expensive health insurance plan in the most popular category will not be returning in 89 markets for 2016. Customers the company has added have tended to use more medical care.

In an October earnings report, CEO Stephen Hemsley called the company’s experience on the exchanges in 2015 “pretty favorable”. UnitedHealth says that it may have to pull out of the exchanges altogether.

Such statements caught many industry experts off guard, including Kathy Hempstead, who directs coverage issues for the nonprofit Robert Wood Johnson Foundation.

Covered California imposed that restriction because UnitedHealth left the state’s individual market at the end of 2013 and spurned the launch of the exchange.

The announcement Thursday marked a sudden shift for UnitedHealth, which had sounded bullish about the health law in recent months.

Their announcements came a day after UnitedHealth Group cut its 2015 forecast due to losses piling up from coverage solid on the exchanges, which let people buy insurance with help from income-based tax credits.

UnitedHealth’s comments represent a sharp turnaround from just last month, when the company said it expected business in the exchanges to improve in 2016 and planned to expand into more exchanges.

Overall, UnitedHealth Group said Thursday it now expects net earnings of $7.10 to $7.30 per share next year, and will provide more detail during an investor conference on December 1.

The news had dragged down shares of health insurers and hospital operators on Thursday. In the call, UnitedHealth expressed concern that buyers were waiting until they became ill and needed care before jumping into the enrollment period.

UnitedHealth hasn’t been alone in endorsing the exchange business, which amounts to a small slice of income for major insurers. That includes advanced recognition of $275 million in losses it anticipates from next year, when it also expects to lose an additional $200 million to $225 million that it can not record in advanced recognition. As some experts note, if the biggest healthcare company can’t make ObamaCare work, you know that others must be struggling even more. That’s a faster pace than previous year, though the second week of sign-ups in 2014 included the Thanksgiving holiday week.

“The health insurance marketplace is entering its third year and continues to grow, giving millions of Americans access to quality affordable insurance”, said Ben Wakana, a spokesman for the U.S. Department of Health and Human Services. “A statement by one issuer is not indicative of the marketplace’s strength and viability”, said Aaron Albright, director of media relations at CMS, in an email response to a LifeZette inquiry.

Caroline Pearson, senior vice president at the consulting firm Avalere Health, said the proposals reflect “an aggressive move to strengthen regulation of the market” in the three dozen states that rely on the federal insurance exchange. The plans that meet Obamacare requirements are created to be everything to everyone, but they have turned out to be what relatively few people actually want. The fewer healthy people in the exchange, the more it costs to cover the sicker customers. Aetna has about 1.1 million individual exchange members and Anthem has 824,000. In 2017, the company might quit completely. “We view it still as a big opportunity”.