UnitedHealth Group Says It May Quit Offering Coverage On Obamacare Exchanges
UnitedHealth Group, the nation's largest health insurance company, says it's considering dropping out of the public exchanges that are an integral part of the Affordable Care Act, because it's losing money on them.
"We cannot sustain these losses," CEO Stephen Hemsley said in an investor call Thursday morning. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."
The company also said it will "pull back" on marketing of the products it sells on the exchanges, while it decides what to do. It also said it was lowering its earnings forecast for the year as a whole.
UnitedHealth's comments represent a sharp turnaround from just last month, when the company said it expected business in the exchanges to improve in 2016 and planned to expand into more exchanges.
The announcement comes at a time of increasing concern about the public exchanges, where customers shop for insurance policies, often receiving federal subsidies to do so.
Several nonprofit insurance cooperatives that were supposed to compete for customers on the exchanges have folded. Meanwhile, some big publicly traded insurance companies, including Anthem, Aetna, Cigna and Humana, say they are enrolling fewer people than expected or even losing money.
A recent report by McKinsey & Co. found that the industry lost a total of $2.5 billion, or $163 per customer, in the individual market.
Insurance companies have had trouble attracting healthy customers to the exchanges to purchase their insurance products, many of which have deductibles of thousands of dollars.
The industry's troubles are reflected in the insurance products being offered on the exchanges during the current enrollment period, reports The Wall Street Journal:
"For these plans, which will take effect in 2016, many insurers have raised premiums in order to cover the medical costs of enrollees, which have run higher than many companies originally projected, fueling this year's losses. Insurers have also shifted to offering more limited choices of health-care providers"
Still, no other big insurer has signaled its intention to leave the exchanges.
Aetna Inc. CEO Mark Bertolini said last month that it was "way too early to call it quits."
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