UnitedHealth may pull individual coverage from exchanges in 2017

As has been widely noted, UnitedHealth is the nation’s biggest health insurer, but that’s misleading: in the individual market served by Obamacare exchanges, it’s small beer.

“We can not sustain these losses”, CEO Stephen Hemsley said during a conference call with investors Thursday, the Associated Press reported.

“I mean, I’m hearing a few people saying ‘Oh, my God, death spiral, ‘” said Jonathan Gruber, an MIT economist and architect of the ACA. He lamented that cooperatives have failed and the market data has signaled higher risks and more difficulties while their own claims experience has deteriorated, leading to them taking this proactive step. United’s comments about the health of exchange-plan holders also run counter to what was expected. Instead, exchange plans are becoming insurance that is purchased primarily by the sick, which isn’t insurance at all but a cost-shifting scheme.

“Participation in exchanges is not essential to our overall benefit offerings, but we remain hopeful these markets will eventually evolve into a viable coverage category for Americans”, Hemsley said.

For 2016, enrollment through exchanges started earlier this month.

“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.

On Thursday, Aetna shares fell 7 percent while Anthem faced a 9 percent drop, though both saw slight rebounds Friday. “With an average of 10 issuers per state, up from nine last year and eight the year before, statements from any one insurer are not a sign of any trend”.

UnitedHealth just joined the Covered California exchange this month after sitting out the first two years. In addition, this announcement was said to be more important for what it implies about the ability of even well-established insurance companies to thrive in marketplaces.

UnitedHealth had raised that forecast twice this year before reaffirming it last month.

UnitedHealth Group, which is among the dozen or so insurers on the MA Health Connector, may cease to offer individual coverage through the online public exchanges beginning in 2017. Companies are still seeing this as potentially good business, which makes sense because from here on out, the people signing up should be healthier. Insurers like UnitedHealth say that the biggest problem has been people “coming in and out of the exchange” when they have health expenses.

But Obama administration officials argued that other insurers are happy in the market. He adds that “the news about United does not presage a death spiral”, because there are too many factors-like the subsidies that keep insurance affordable for millions even as premiums rise-that will keep customers in the markets.

Insurers expect several new regulations to drive healthier consumers onto the exchanges over the next few years.

Centene Corp. on Thursday reiterated its 2015 profit forecast and sad its health insurance marketplace business “continues to perform in line with expectations”. Those lower-premium plans that Obama described as worthless because they didn’t pay out anything were no worse than the plans that replaced them and don’t pay out anything until a consumer has racked up $2,000 or more in medical bills. These announcements follow UnitedHealth’s statement Thursday it cut its profit forecast in response to an expected $425 million loss on individual plans sold on the exchange in 2015 and 2016.

Like Aetna, that performance resulted in management boosting its outlook for full-year EPS of at least $10.10, which is far higher than the $9.30 it came into 2015 expecting to earn per share.