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Affordable Care Act not working as intended
When UnitedHealth Group, the company that owns major insurer UnitedHealthcare, said Thursday it was considering pulling out of Affordable Care Act exchanges in 2017, it cited “a continuing deterioration in individual exchange-compliant product performance” and a loss of $425 million from plans it had sold through those health insurance marketplaces.
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Both payers said business performed as expected, including plans on the exchange, according to the report.
The nation’s largest insurer, UnitedHealth Group, made a surprise announcement on Thursday that it has been losing so much money on exchange health plans in 23 states that it is halting marketing efforts to enroll people for 2016 – and is debating whether to pull out entirely in 2017.
Anthem said last month in an earnings call that enrollment in the exchanges did not meet expectations, which is creating losses for the company, but it expects the exchanges to stabilize in the long run. UNH came up with its revised 2015 earnings expectation which was pushed down to $6 per share from the earlier expected range of $6.25 to $6.35.
UnitedHealth is the fourth-largest insurer in the exchanges, after Aetna, with 1.1 million customers; Anthem, with 824,000 customers and Humana, with 610,000. Insurers’ participation in the health care exchanges is optional.
Just a month ago, UnitedHealth said that it was expecting substantial improvement for the Obamacare business in 2016.
As cost shifting among employer-sponsored health plans increases, a quarter of working adults with private health insurance can’t afford their health care costs, a new analysis shows. The plans require patients to first pay deductibles that can top several thousand dollars before most coverage begins. Those customers were 30 percent of the UnitedHealth exchange customer base. Covered California, the state’s individual plan exchange, limited UnitedHealth to selling 2016 in a few smaller markets, as my colleague Chad Terhune reported, because the company left the state’s individual market in 2013 and spurned the launch of the exchange.
“We have full confidence, backed up by data, that the marketplaces will continue to thrive for years ahead and build on the 17.6 million who have already gained coverage through the ACA”, a senior administration official told FierceHealthPayer in an email. 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.
Tennesseans looking for low-priced health insurance under the Affordable Care Act may find fewer choices after 2016.
Neither payer indicated dropping plans on the ACA exchanges.
On one side were critics of the Affordable Care Act, the proper name of the 2010 federal legislation, who said the news pointed to a fundamentally flawed system put in place by the law and could trigger a flight for the exits by other insurers.
“If they can’t make money on the exchanges, it seems it would be hard for anyone”, said Katherine Hempstead, who heads the insurance coverage team at the Robert Wood Johnson Foundation.
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“Insurance doesn’t answer all of the questions and solve all of the problems, but it makes it easier”, Jenny Englerth, CEO of Family First Health, said. For example, a recent economics study found that a typical single person making $40,000 is generally $1,500 to $3,500 better off by remaining uninsured as opposed to purchasing an exchange plan. It had about 815,000 members in plans on the exchanges and 275,000 in plans sold off the exchanges.