Health insurer UnitedHealth cut its earnings forecast, citing hits it expects to take from public insurance exchanges.
November 19, 2015
Industry giant UnitedHealth has warned it may quit selling Obamacare coverage across the country, raising questions about an expansion in California.
The nation’s largest health insurer cut its earnings forecast Thursday, citing slower growth on public exchanges under the Affordable Care Act and higher-than-expected claims for those individual policies.
The company said it was pulling back on its marketing of health-law coverage just a few weeks after open enrollment began Nov. 1. UnitedHealth said it will decide in the first half of next year “to what extent it can continue to serve the public exchange markets in 2017.”
UnitedHealth Chief Executive Stephen Hemsley told analysts and investors that “we cannot sustain these losses…. We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
The announcement comes as UnitedHealth is seeking a toehold in California’s Obamacare market — after snubbing the state two years ago.
Nationwide, UnitedHealth has more than 500,000 people enrolled on government exchanges out of about 10 million Americans who have signed up. Rivals Anthem and Aetna both have a bigger presence with a combined enrollment of about 1.6 million people.
Analysts said the exchanges can continue to function without UnitedHealth, but stagnant enrollment is a concern industrywide.
UnitedHealth’s exit “would be a blow to multiple exchange markets, but not a death knell,” said Bill Melville, a senior analyst for Decision Resources Group, a research firm in Burlington, Mass. “All insurers in the exchanges are facing similarly rough head winds.”
Enrollment growth has slowed as many of the uninsured balk at buying high-deductible health plans, even with federal subsidies available. It’s crucial for insurers to sign up enough healthy people to help pay for sicker policyholders who eagerly seek out coverage.
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