The company said Thursday that it would pull back on the marketing of its exchange business, a few weeks after open enrollment for that coverage began nationwide.
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“We can not sustain these losses”, CEO Stephen Hemsley said in an investor call Thursday morning. “We can’t subsidize a market that doesn’t appear at this point to be sustaining itself”.
For UnitedHealth, it marks a dramatic shift after the Minneapolis company said last month that it was expanding into 11 more exchanges next year. UnitedHealth Group warned it may stop offering coverage to individuals through public exchanges after taking a big hit to its bottom line from disappointing enrollment and the law’s unexpected effects.
The significance of this news, from the nation’s largest insurance company, can not be overstated. Meanwhile, some big publicly traded insurance companies, including Anthem, Aetna, Cigna and Humana, say they are enrolling fewer people than expected or even losing money. The exchanges represent a small share of UnitedHealth’s overall insurance enrollment.
“We see this as a temporary headwind that will be rectified through market exits by health plans for 2017 or through policy changes”, Gupte wrote.
“I don’t know what happened”.
UnitedHealth had entered a small number of markets in 2014, the first year the exchanges opened.
Obamacare established a network of federal and state exchanges through which individuals who do not have insurance through their employer can obtain coverage – often with federal tax credits and subsidies. Thursday’s announ?ement, coming as potential customers were beginning to ponder their choices for insurance in 2016, could be seen as part of the same effort-who would sign up today for 2016, with a company that might not still be your insurer in 2017?
“I left there energized. We view it still as a big opportunity for the company”, said Bertoloni, whose company will be in 15 states.
Then the agency was informed Monday that UnitedHealth is cutting its sales commissions for brokers signing up customers in the Wisconsin exchange, McCardle said.
“We were very surprised. Puzzling and frustrating”, McCardle said. The administration has projected about 1 million in new paid enrollment next year, far short of an earlier estimate from the Congressional Budget Office of 8 million. Although, UnitedHealth hasn’t made the decision to exit the public insurance exchanges just yet, Hemsly seemed bearish on the outlook for the exchanges. Here are two quotes about the Obamacare exchanges, from two health insurer investor calls.
The insurer also guided that its fourth quarter revenues will be $425 million less than originally anticipated, a negative impact of 26 cents in earnings per share.
Obama administration officials “need to think about” what UnitedHealth has said “and go further and assess whether companies that have stronger position on the exchanges are experiencing the same things, and they need to fix it”.
UnitedHealth Group said last month it expects better results from its ACA policies sold in more than two dozen states in 2016.
The Blue Cross-Blue Shield insurer Anthem Inc. also told analysts it was well-positioned for growth in that market once it stabilizes.
Consumers have also criticized plans for requiring them to meet high deductibles out of pocket before their coverage kicks in, as well as steep increases in monthly premiums from year to year.
Under that program, the state uses Medicaid funds to buy coverage on the exchange for adults who have incomes of up to 138 percent of the poverty level: $16,242 for an individual, for instance, or $33,465 for a family of four.
The industry’s woes, and broad rate increases aimed at stanching the red ink, are putting pressure on the Obama administration to tweak aspects of the law; the issues also risk pulling the ACA back into the political spotlight.
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UnitedHealth Group, which insures almost 600,000 people in the government-led program, said the moves are due to “higher risks” that make it more challenging to turn a profit.
