What Helmsley described was a company caught up in the classic “death spiral” that IBD and reputable economists have been warning about: Insurance policy sales going in the main to the sickest patients who use the most health care services, while the high prices of the larded-up government-mandated packages continue to drive off younger, healthier consumers.
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Still, Bertolini said the market “remains challenging”, and Aetna reduced the number of states where it sells coverage to 15 for next year from 17.
“There’s still a lot of demand [from customers] in this market”, she said. “That’s the lesson here”.
But the exchanges aren’t on the verge of collapse, either.
Regardless, because 10 million Americans are expected to get their insurance through the exchanges during this open enrollment, and rising penalties this year and next year could further increase enrollment, long-term thinking by insurers and investors could be rewarded. The analyst also wondered whether it was a viable exchange plan since one of the biggest health insurer failed to make money on the exchanges.
An Aetna spokesperson told USA TODAY on Friday that the CFO’s remarks remain representative of the company’s outlook. The small health insurers, which focus on Medicaid, also said its exchange business was performing in line with its expectations. Patients with medical needs who had not been able to find coverage were more likely to enroll first in these exchanges, ahead of healthy patients who would contribute premium payments but not use as much health care.
If UnitedHealth Group does opt out of offering plans on the exchanges, it could create a big gap to fill, significantly reduce competition in certain markets, and effectively lead to other insurers increasing their premiums by more than they would have otherwise.
The company’s threatened withdrawal also puts more pressure on regulators to scrutinize the proposed mergers of its rivals: Anthem with Cigna and Aetna with Humana. It had been a reluctant participant, staying largely on the sidelines in 2014. “They came late to the party, and their enrollment is still relatively modest”.
The Obama administration hasn’t projected much improvement in enrollment for 2016.
However, federal government spokesperson Jonathan Gold called the statement by one issuer “not indicative of the marketplace’s strength and viability”. Yet in 2014, Hemsley took home more than million in total compensation, and pay for healthcare executives has steadily risen in recent years even as experts have suggested that such pay hurts both insurers and customers. In fact, CEO Stephen Hemsley stated that the company expects to lose between $200 million to $225 million in the coming year.
“The reality is we continue to see more people signing up for health insurance and more issuers entering the Marketplaces, and at the end of January, we believe we’ll be looking at another successful open enrollment – just like the last two”, Wakana said.
UnitedHealth, the nation’s largest insurer, is scaling back its marketing of Obamacare exchange plans and may exit the program completely.
UnitedHealth had raised that forecast twice this year before reaffirming it last month.
The company lowered its full-year 2015 earnings-per-share forecast to $6, down from $6.25 to $6.35, and shares of UnitedHealth stock fell 5.7% to close at $110.63.
Analysts expect earnings of $6.31 per share, on average, according to FactSet.
‘If [UnitedHealth] can’t make money on the exchanges, it seems it would be hard for anyone, ‘ Katherine Hempstead, insurance coverage chief at the Robert Wood Johnson Foundation, said in an article Friday in USA Today.
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The company also issued a fresh guidance for 2016 saying that it expects earnings in the range of $7.10 and $7.30 per share.
