Tags: UnitedHealth | Obamacare | Insurance | Stock

UnitedHealth May Quit Obamacare Markets in Blow to Health Law

UnitedHealth May Quit Obamacare Markets in Blow to Health Law
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Thursday, 19 November 2015 10:00 AM

The U.S.’ biggest health insurer is considering pulling out of Obamacare, a month after saying it would expand its presence in the program.

UnitedHealth Group Inc. is scaling back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the market entirely in 2017, because the business has proven to be more costly than expected. It’s an abrupt shift from October, when the health insurer said it was planning to sell coverage in 11 new markets next year, bringing its total to 34. The company also cut its 2015 earnings forecast.

A pull-back would deal a significant blow to President Barack Obama’s signature domestic policy achievement. While UnitedHealth has been slower than some of its rivals to sell Obamacare policies since new government-run marketplaces for the plans opened in late 2013, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.

“If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise,” Skolnick said.

550,000 in Obamacare

UnitedHealth covers fewer than 550,000 people on the Obamacare exchanges. About 9.9 million people who had insurance through the U.S.- and state-run insurance markets as of June 30.

“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 statement Thursday announcing the changes.

The company’s shares fell 5.3 percent to $111 in early trading in New York. Anthem Inc. and Aetna Inc., the two biggest health insurers after UnitedHealth, also declined.

Last month, UnitedHealth had struck a more optimistic note.

“I think we’ll see strikingly better performance on the insurance exchange business” next year, Chief Financial Officer David Wichmann told analysts on an Oct. 15 conference call.

Insurers have struggled to profit from the government-run marketplaces created by Obamacare. About dozen non-profit “co- op” plans created under the ACA have failed, after charging too little to cover the cost of patients’ medical care, and because an Obama administration fund designed to stabilize the market paid out just 12.6 percent of what insurers requested. And Anthem said last month said some rivals were offering premiums too low to provide the coverage patients require and book a profit.

UnitedHealth also said Thursday that earnings per share will probably be $6 this year, down from a range of $6.25 to $6.35, reflecting a “continuing deterioration in individual exchange-compliant product performance. Next year, earnings per share will be between $7.10 and $7.30, the first time it has given 2016 estimates.

The company plans to hold a conference call at 9 a.m. New York time, and has an investor day scheduled for Dec. 1.

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UnitedHealth Group Inc., the largest U.S. health insurer, said it may pull out of the Obamacare insurance exchange market and cut its earnings estimate for the year.
UnitedHealth, Obamacare, Insurance, Stock
Thursday, 19 November 2015 10:00 AM
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