That can be a particular risk in new markets with which an insurer is not familiar.
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This news joins the growing flops that the Administration must struggle with about ObamaCare.
University of Minnesota Health Policy and Management Professor Jean Abraham says UnitedHealth’s frank assessment of doing business on public exchanges will attract policy makers’ attention.
In addition that, competitors such as Aetna Inc. and Anthem Inc. have also said that they were seeing few people enrolling in insurance programs, but did not say whether they were considering to exit the business.
“Thanks to the Affordable Care Act, there are now programs in place to give consumers maximum value for their premium dollar”, said Kevin Counihan, CEO of the Health Insurance Marketplace. And as the WSJ notes, an analysis by McKinsey & Co. determined that the first year of the exchanges-2014-cost insurers $2.5 billion in losses. Those lower-premium plans that Obama described as worthless because they didn’t pay out anything were no worse than the plans that replaced them and don’t pay out anything until a consumer has racked up $2,000 or more in medical bills.
“As we’ve seen during the first two weeks of open enrollment, every day, tens of thousands more Americans turn to the health insurance marketplace for health coverage and even more return to the marketplace for another year”, said Aaron Albright, spokesman for the Centers for Medicare and Medicaid Services, which oversees Obamacare.
The Obama administration said UnitedHealth’s announcement isn’t a sign of larger problems. It said it was losing money on the Obamacare business because of low enrollment and high costs.
“When health plans can not rely on the government to meet its obligations, individuals and families are harmed as a result”, said Tavenner.
However, federal government spokesperson Jonathan Gold called the statement by one issuer “not indicative of the marketplace’s strength and viability”.
Here we go again: another round of ‘Is this the beginning of the end for Obamacare?’ It’s not a Supreme Court case this time, but an earnings call from the nation’s largest health insurer, UnitedHealth Group. The draft rules, an annual ACA ritual, will begin a debate about what guidelines insurers will have to follow to sell exchange policies for 2017.
“There’s still a lot of demand [from customers] in this market”, she said.
ObamaCare has turned into a bait-and-switch scheme leaving many insurers in the red rather than with a windfall of profitable new patients.
“People who purchase insurance through the public exchanges are typically heavy users of their plans, draining insurers’ profits”, according to USA Today.
Abraham says that could spur policy makers to take a hard look at what could be done to make exchanges more viable.
Analysts said people who purchase insurance through the Affordable Care Act are typically sicker and cost more to treat. That drains a company’s profits.
UnitedHealthcare’s Thursday bombshell rattled investors, health-plan subscribers and ObamaCare partisans. UnitedHealth didn’t widely offer plans under the Affordable Care Act until 2015, a year after Anthem and Aetna, and covers fewer than 550,000 people out of 9.9 million with private insurance under the law.
UnitedHealth CEO Stephen Helmsley said, “We cannot sustain these losses, we can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself”.
While the administration could try to boost funding to help mitigate insurer losses, such a plan would not be likely to find support from either political party.
On Friday, Aetna reaffirmed its full-year guidance, saying its individual commercial business, including exchange coverage, was performing as expected.
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“Enrollment has grown year over year”.
