UnitedHealth May Withdraw From Obamacare

Facing major losses in its Obamacare business, UnitedHealth said Thursday it would evaluate the viability of its exchange offerings in the first half of 2016.

UnitedHealth (UNH) downgraded has reduced its earnings forecast owing to reduced growth projections for Obamacare enrollment.

State-based health insurance exchanges opened a few years ago as a way for customers to buy individual health insurance, many with help from income-based tax credits.

Insurers in many markets have struggled to find the right mix of healthy customers to balance the sicker ones since the new market of public insurance exchanges opened for business in the fall of 2013.

Abraham says that could spur policy makers to take a hard look at what could be done to make exchanges more viable.

“We are going to need to be patient until this works itself out, which we hope will be by 2017 and 2018”, DeVeydt said. “That’s the lesson here”. Now, insurers say that they’ve seen unhealthy people sign up for coverage, get care, and then stop paying their premiums.

Peter Costa, an analyst at Wells Fargo & Co, said Thursday that he expects Anthem and Aetna to lose money on the exchanges next year, potentially leading them to reconsider their postures. UnitedHealth said it suspended marketing of its individual exchange plans and is cutting or eliminating commissions for brokers who sell the coverage in many markets.

Blue Cross-Blue Shield insurer Anthem and Medicaid coverage provider Molina Healthcare both said they are making money off their exchange business, and Anthem joined Aetna, the nation’s third-largest health insurer, in reaffirming its 2015 earnings forecast.

On Thursday, federal officials issued a statement expressing their commitment to pay the amount owed the insurers.

The Obama administration said UnitedHealth’s announcement isn’t a sign of larger problems.

The company’s threatened withdrawal also puts more pressure on regulators to scrutinize the proposed mergers of its rivals: Anthem with Cigna and Aetna with Humana. It had been a reluctant participant, staying largely on the sidelines in 2014. Those moves come as the biggest insurers seek cost efficiency and scale as the health-care landscape changes because of the Affordable Care Act and other factors.

The Obama administration hasn’t projected much improvement in enrollment for 2016.

UnitedHealth announced to shareholders that low enrollment and high costs were threatening its ability to participate in the health-care law, and that it would decide next winter or spring whether to end the program at the end of 2016.

Aetna Inc. CEO Mark Bertolini said last month that it was “way too early to call it quits”. The health insurance firm will also record costs of $275 million in the fourth quarter of the current year.

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

“I’m sorry to hear one player may pull out, but I think there’s plenty of competition”, Senator Ben Cardin, a Maryland Democrat who backs the law, said in an interview in the U.S. Capitol. That’s a small slice of its total enrollment, which exceeds 46 million counting global business. Just last month the company seemed enthusiastic about its future with ACA when speaking with investors.