“The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017”, UnitedHealth said in a written statement Thursday announcing the changes.
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Hospitals were boosted Friday when UnitedHealth rivals Aetna Inc (AET.N) and Anthem (ANTM.N) reiterated their 2015 earnings forecasts and said their business from the exchanges performed in line with projections through October. It also will decide in the first half of 2016 whether it will participate in the exchanges for 2017. He lamented that cooperatives have failed and the market data has signaled higher risks and more difficulties while their own claims experience has deteriorated, leading to them taking this proactive step. These numbers are far more than 550,000 members that UnitedHealth covers on exchanges.
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. About 9.9 million people had insurance through the insurance markets as of June 30.
Aetna Inc. CEO Mark Bertolini agrees with Gorman, telling analysts last month that his company still sees exchanges as an opportunity and it was “way to early to call it quits”, according to AP. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself”.
Shares of the big health insurers all started tumbling Thursday before markets opened and after UnitedHealth delivered its update.
Shares of Aetna Inc. climbed 4 percent, or $4.06 to $104.01 in midday trading Friday, while Anthem Inc. stock was up more than 2 percent, or $2.83, to $130.67. In addition, this announcement was said to be more important for what it implies about the ability of even well-established insurance companies to thrive in marketplaces.
That focused attention on the other, larger players in the Affordable Care Act marketplaces where millions of Americans purchase insurance – Anthem and Aetna.
ObamaCare has turned into a bait-and-switch scheme leaving many insurers in the red rather than with a windfall of profitable new patients.
Anthem, the nation’s second largest insurer, said its enrollment in the public exchanges fell by 69,000 people to 824,000 in the third quarter.
“The exchange business is unprofitable, ‘”Guertin said”. That includes insurance sold on the exchanges, a key component in the ACA’s push to expand insurance coverage. The premiums are too high, and the deductibles are so big that having the policies are the same for most people as having no health insurance at all. They can lose money if not enough healthy people sign up or – as UnitedHealth and other insurers have said with Obamacare – customers sign up, get treatment and then drop the policy.
“A very important national insurer in the United States has now publicly stated that they’re very concerned about the long-term feasibility of their participation on the exchanges”, Abraham said. 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.
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Nichols, Gupte and other analysts agree with the industry’s trade lobby, which says one thing the administration could do is make good on a promise to pay insurers under a temporary program created to redistribute profits from a few insurers that did especially well to offset losses others experienced in the marketplace plans. That program, however, has paid only about 13 cents on the dollar of what was promised, mainly because fewer insurers than expected made money.
