One of the country’s largest health insurers warned Thursday that it may leave the ObamaCare exchanges within two years, a shock that could send major ripple effects through the marketplace.
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The company lowered the full-year per share earnings of 2015 to $6.
In St. Louis, if consumers are shopping for broad access to a range of providers, they tend to pick UnitedHealth, local health insurance broker Emily Bremer said.
While the company posted a 27% increase in third quarter revenue, as reported by The Wall Street Journal, the company expects large losses through the ACA’s exchanges, marking “the most prominent signal so far of health insurers’ struggles with the health laws marketplaces”. UnitedHealthcare, the insurance subsidiary of UnitedHealth Group, expanded its individual exchange products to 27 counties in IL for the 2016 policy year. A spokesman says those plans remain in place.
Eighty-seven percent of those who have private coverage through these exchanges receive tax credits to reduce their premiums, as do people who earn between the federal poverty level – about $12,000 for a single person – and up to four times that amount.
The $425 million shortfall from exchange products includes $275 million that UnitedHealth expects to lose from its 2016 plans. “I think we’ll see strikingly better performance on the insurance exchange business”, Dave Wichmann, UnitedHealth’s chief financial officer, said on the call.
Last month, UnitedHealth had struck a more optimistic note. That’s down from a prior target of $6.25 to $6.35, according to a Reuters report. A Goldman Sachs Group Inc. analysis of state filings for 30 not-for-profit Blue Cross and Blue Shield insurers found that their overall companywide results were “barely break-even” for the first half of 2015. Those plans also have been hurt by lower-than-expect payments from overhaul programs created to support the insurers while they learn how to price coverage on the exchanges.
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The company cited a variety of factors, including the failure of more than half of Obamacare’s nonprofit co-op plans, in revising its 2015 outlook down to $6 per share. Shares of insurers Anthem and Aetna also fell sharply.
