On Thursday, UnitedHealth Group, the nation’s largest health insurer, has warned that it can withdraw from the Obamacare exchanges after the next year.
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Several of Obama’s fellow Democrats are also considering changes to the Affordable Care Act, including whether to alter the “Cadillac tax”, a levy on high-cost health plans sponsored by employers. “If they can’t make this work, that means this is a really tough environment”. Now that the system is in place, insurers are finding that the people who are buying insurance on the Obamacare exchanges are in much poorer health than they had anticipated.
Neither payer indicated dropping plans on the ACA exchanges.
Aetna said its individual commercial business continued to perform in line with its expectations.
One might wish for United’s top brass to get their stories straight, but the fact is that the company seems to have worked virtually since the November 1 start of open enrollment for 2016 to discourage enrollment. The company lowered its earnings forecast by $425 million – representing a worsened outlook for ACA plans in the fourth quarter of 2015 and all of 2016 – a month after publicly expressing optimism about Obamacare’s prospects.
As a result, the company said it cut its full-year earnings forecast to $6 per share from a previous range of $6.25 to $6.35. Thirty percent of people with moderate incomes and 53% with low incomes can’t afford their health care costs, the report showed. Aetna has about 1.1 million individual exchange members and Anthem has 824,000.
He called for the administration to loosen regulatory restrictions on the design of insurance plans so that insurers can offer customers coverage that is more affordable while still being attractive. It plans to participate on individual exchanges in 15 states next year, down from 17 states in 2015. The health insurance indicated that it was intending to sell the plans in eleven more States commencing from next year through the Affordable Care Act. “We can not sustain these losses”, he said flatly. “Today’s statement by one issuer is not indicative of the marketplace’s strength and viability”.
A selloff of UnitedHealth Group stock on Friday pushed other major healthcare stocks lower following the insurer’s warning that it may exit the Obamacare marketplace exchange business. UnitedHealthcare, the insurance subsidiary of UnitedHealth Group, expanded its individual exchange products from one county to 27 counties in IL for the 2016 policy year. “They hope it will be at a few point, but it’s not there yet, and without a public option [a government-sponsored health plan] and with the co-ops exiting in much of the country, you know Obamacare needs private insurers to play”.
This way, insurers wouldn’t have to spend huge amounts of money to finance medical care for the sick without having the financial cushion of insurance premiums from people who were not sick.
While UnitedHealth’s statement is significant, Kaiser Family Foundation Senior Vice President Larry Levitt said it “matters more for what it says about what industry as a whole thinks about Obamacare”. About 1.1 million people have signed up for coverage in the first two weeks of enrollment this year, which began on November 1.
The insurer covers about 500,000 people.
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Like UnitedHealth, Aetna’s Guertin also raised concerns about a trend of consumers using the “special enrollment” period allowed by Obamacare to buy insurance outside of open enrollment periods and then drop coverage after they’ve received certain procedures. More coverage helped hospitals reduce bad debts from patients who can not pay.
