USA defends Obamacare after top insurer threatens pullout

UnitedHealth’s announcement that it is revising its earnings outlook to account for losses in the individual market sent shockwaves through the industry and raised new questions about the viability of Affordable Care Act exchanges.

UnitedHealth Group said Thursday that it will scale back marketing for plans it sells on the exchanges and decide next year whether it will even stay in that business in 2017. “Enhanced/SecCapsule.aspx?c=130104&fid=10422667″>backed their 2015 earnings forecasts.

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.

Yet it was enough to make the giant company and all the value it creates throughout its many operations suffer enough to trigger, as IBD market reporter Jed Graham wrote, “a surge of red ink”.

Analysts also say UnitedHealth’s announcement could impact 2016 elections, aiding Republican efforts to undermine the healthcare law.

CEO Stephen Hemsley said in an October earnings call that the company had a “pretty favorable experience” on the exchanges in the first half of 2015.

“The reality is we continue to see more people signing up for health insurance and more issuers entering the Marketplaces, and at the end of January, we believe we’ll be looking at another successful open enrollment – just like the last two”, Wakana said. “American health care is undergoing significant change and evolution, and the health exchanges are part of that disruption”. The company is the largest healthcare insurer in the country, but has taken a severe financial beating of $275 million in its 4th quarter from its public insurance exchange business. That’s about 1 percent of the 46,000 people who buy insurance on the Connector and do not receive subsidies to help defray the costs.

ObamaCare: United Healthcare’s surprise warning that it may scrap participation in federal health care exchanges is more than bad news for consumer choice. On Thursday, the company said it expected these plans to hurt current-quarter profit by $425 million, or 26 cents per share.

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. It is a risk that comes in fresh markets where the insurer would not have been familiar with.

Hemsley said one problem for insurers is that a few customers only maintain a policy for as long as they have a planned medical expense – and then quit. Last month, it predicted substantial improvement in 2016 for the Obamacare business. The stoppage of payments through the end of the year may lead to a loss of $2 million, according to the Post- never to be recovered by the participating brokers. That’s a faster pace than previous year, though the second week of sign-ups in 2014 included the Thanksgiving holiday week.

Insurers would like to see more federal dollars go to cover a few of their losses.

The company has about a half a million people enrolled in the exchanges, a relatively small amount in terms of the the 10 million expected to be enrolled in 2016, according to the NY Times.

Moreover, it is most likely that other insurers would also be mulling over exiting the exchanges, though no such comments have been heard from other big players on the insurance exchange like Aetna and Anthem which have about 1.1 million individual exchange members and 824,000 members, respectively.

Tanquilut estimated that patients covered by the exchanges represented only 5 percent of his expectations for HCA’s 2015 earnings before interest, tax, depreciation and amortization.