Nation's biggest health insurer threatens to drop Obamacare
The nation鈥檚 largest health insurer UnitedHealth said Thursday it is having serious doubts about participating in Obamacare.
The company cut back projected 2016 earnings Thursday, reporting potential losses of $275 million, or 26 cents per share, due to plans sold through Affordable Care Act (ACA) exchanges.
In response to these losses, UnitedHeath announced it will reduce its marketing efforts for these exchange plans when the current sign-up period ends and reconsider 鈥渢o what extent it can continue to serve the ,鈥� suggesting potential withdraw from ACA altogether.聽
鈥淲e cannot sustain these losses,鈥� CEO Stephen Hemsley said during a conference call with investors Thursday, the Associated Press reported. 鈥淲e can鈥檛 really subsidize a marketplace that doesn鈥檛 appear at the moment to be sustaining itself.鈥�
UnitedHealth said they will announce a formal decision during the first half of 2016, but the current data doesn鈥檛 look very promising.聽
鈥淚n recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step,鈥� said Mr. Hemsley.
This announcement from UnitedHealth is unexpected. The largest US insurer, serving about 70 million individuals, has increased its ACA involvement over the past two years. Originally starting with four exchanges, the company increased to 24 exchanges this year alone. Just last month the company seemed enthusiastic about its future with ACA when speaking with investors.
鈥淚 think we鈥檒l see on the insurance exchange business鈥� in 2016, UnitedHealth CFO David Wichmann said last month. The company also suggested that it would expand into 11 more exchanges next year.聽
The Minnesota-based insurer serves about 500,000 of the overall 10 million individuals who have signed up for healthcare coverage through Obamacare, or about five percent of the market. So although UnitedHealth鈥檚 withdraw would impact a number of Americans, its participation is far less than Anthem, Aetna, or Humana Inc.
John Gorman, an insurance consultant, suggests UnitedHealth is acting quickly and irrationally. Mr. Gorman says the company should have waited at least four years to give the marketplaces time to stabilize.聽
鈥淚t struck me as having kind of ,鈥� Gorman told Politico. 鈥淵ou have to be willing to take the rollercoaster ride.鈥�
Aetna Inc. CEO Mark Bertolini agrees with Gorman, telling analysts last month that his company still sees exchanges as an opportunity and it was 鈥渨ay to early to call it quits,鈥� according to AP.
Analysts also say UnitedHealth鈥檚 announcement could impact 2016 elections, aiding Republican efforts to undermine the healthcare law.
鈥淲e call upon Senate Republicans to use reconciliation to send a full repeal of Obamacare to the president鈥檚 desk,鈥� FreedomWorks CEO Adam Brandon said in a . 鈥淣ow is not the time for timid tinkering.鈥�
This report contains material from Reuters and the Associated Press.
