Democrats could also face pressure if UnitedHealth and other players depart the exchanges because less competition could mean higher insurance premiums.
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The two insurers are on the hot seat now that UnitedHealth Group Inc. appears unlikely to linger as a seller on the Affordable Care Act’s government-run markets.
“If they exited (the exchanges), it wouldn’t matter that much to the functioning of the ACA, but it would show why increasing enrollment is so important”, Levitt said.
Although it’s the nation’s largest insurer, United captured only a small percentage of consumers who now have coverage through the Affordable Care Act marketplace, in part because it sat out the first year of enrollment and really ramped up only for this year’s coverage.
Many health care economists, and frankly, many people who also have only a cursory understanding of markets have been saying from the beginning that Obamacare was doomed to fail because the numbers just didn’t add up.
While UnitedHealth has been slower than a few of its rivals to sell Obamacare policies, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.
Anthem remains committed to the exchanges and to “continuing our dialogue with policymakers and regulators regarding how we can improve the stability of the individual market”, Chief Executive Officer Joseph Swedish said in a statement.
The $425 million shortfall from exchange products includes $275 million that UnitedHealth expects to lose from its 2016 plans.
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. UnitedHealth wound up dropping 5.6 percent, or $6.57, to close at $110.68. In October, the U.S. Department of Health and Human Services forecast about 10 million people would have plans in 2016, significantly below industry expectations of 20 million.
This year, the marketplaces saw enrollment of more than 9 million customers, although the law’s expansion of Medicaid enrollment in many states has also played a large role in reducing the overall number of uninsured. Enrollment for 2016 coverage started November 1, and more than 1 million people signed up or renewed coverage in the first two weeks, according to the Obama administration.
For its third quarter ended September 30, UnitedHealth’s profit was $1.69 billion, compared to $1.59 billion for the subsequent quarter.
He said the company’s enrollees in the individual market have increased their use of medical services as the end of the year approaches. Already 12 of the 23 nonprofit exchanges created to sell insurance under the ACA have said they’re closing down, overwhelmed by financial losses.
The company said Thursday that it limited the damage for 2016 by setting relatively high prices for next year, even as it expanded into 11 more states.
Ed Haislmaier, a senior research fellow in health policy studies at The Heritage Foundation, told The Daily Signal that UnitedHealth’s announcement is “quite interesting” given that it recently “expanded [its] footprint” in the exchanges.
She said there are ways to nudge more healthy people into buying health insurance.
The Obama administration mitigated a few of that risk in the first year with payments to insurers, but that funding has declined. Aetna and Anthem had referred back to earlier comments when asked on Thursday about UnitedHealth’s commentary.
“We can not sustain these losses”, he told Wall Street analysts.
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“Today’s statement by one issuer is not indicative of the marketplace’s strength and viability”, Wakana said in an email.
