The country’s largest health insurance provider is warning that it may leave the Affordable Care Act.
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Since November 2013, shortly after the Obamacare insurance exchanges first opened amid major technical snafus and missteps, no more than 54 percent of Americans have given solid grades to the quality of health care in this country.
The insurer has been hurt in particular by customers who signed up for coverage outside the open enrollment window and use more health care in general than those who bought coverage during open enrollment.
Tim McBride, a health care economist at Washington University, says the big insurer’s bombshell is just part of a natural sorting-out process. Kaiser covers about 450,000 people in nine exchanges, and a spokeswoman said they are confident that the business is financially stable.
Here’s a quiz: Following are two quotes about the Obamacare exchanges, from two health insurer investor calls. Until that happens, the exchanges won’t be a viable, long-term market for these companies, Morningstar analyst Vishnu Lekraj said. Chief Executive Mario Molina said the company wasn’t seeing the issues UnitedHealth flagged.
That, many worry, could represent the tip of the iceberg for an industry still waiting to see if Obamacare, which aims to extend health care coverage to millions more Americans at cheaper rates, works as planned. It backed its full-year 2015 operating earnings forecast of $7.45 to $7.55 per share.
Several nonprofit health insurance cooperatives established to compete with insurers on the exchanges announced earlier this year that they would fold.
Aetna said last month that the exchanges remain a good market, even though enrollment fell. Insurers like UnitedHealth say that the biggest problem has been people “coming in and out of the exchange” when they have health expenses.
The company’s late start allowed competitors Aetna (NYSE:AET) and Anthem (NYSE:ANTM) to get a valuable head start in signing up members, but UnitedHealth Group’s expansion into additional states this year did allow it to sign up more than a half a million members through Obamacare.
Blaming a “continuing deterioration” in individual exchange product performance, the nation’s largest insurer said it will decide in the first half of next year to what extent it will continue to participate in public exchange markets in 2017.
Anthem and Aetna both have big merger deals on the table to be reviewed by the government-Anthem has an agreement in place to buy Cigna Corp., while Aetna Inc. has an agreement to buy Humana Inc.
“That’s certainly something that other carriers so complained about”, Hempstead points out, though she said it’s unclear if UnitedHealth was in a few way uniquely affected by that trend relative to other insurance carriers.
“In the event of a shortfall for the 2016 program year, the Department of Health and Human Services (HHS) will explore other sources of funding for risk corridors payments, subject to the availability of appropriations”, the memo said.
For UnitedHealth, it marks a dramatic shift after the Minneapolis company said last month that it was expanding into 11 more exchanges next year. 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. The future of Obamacare now looks like more money for less generous coverage than its architects had hoped in the first few years.
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Friday’s proposal doesn’t make clear whether the administration is committed to doing so, Mendelson said, but it does show the administration can act without turning to Congress.
