UnitedHealth, the nation's largest insurer, is scaling back its marketing of Obamacare exchange plans and may exit the program completely.
Facing major losses in its Obamacare business, UnitedHealth (UNH) said Thursday it would evaluate the viability of its exchange offerings in the first half of 2016. Some 550,000 people are enrolled in the insurer's exchange plans.
The announcement is the latest in a string of bad news for President Obama's signature health law. A dozen cooperative insurers set up and funded by Obamacare have failed this year. Some of the remaining insurers are hiking premiums by double digits for 2016 as they look to cover enrollees' medical bills. (The benchmark silver plan is increasing an average of 7.5%. nationwide)
Also, a key federal program designed to cushion health insurers' risks in the exchanges has a massive shortfall and will pay out only 12.6% of insurers' claims for 2014. And the Obama administration announced it expected only 10 million people to be covered by exchange policies by the end of 2016, just a little higher than this year's goal of 9.1 million.
UnitedHealth's move also comes a month after it gave a relatively upbeat view of its Obamacare participation. CEO Stephen Hemsley said in an October earnings call that the company had a "pretty favorable experience" on the exchanges in the first half of 2015. UnitedHealth boosted its Obamacare presence for 2016, expanding to 11 new markets.
"Going forward in 2016 ... I think we'll see strikingly better performance on the insurance exchange business," Dave Wichmann, UnitedHealth's chief financial officer, said on the call.
But on Thursday, the insurer reduced its fourth-quarter earnings outlook by $425 million, or 26 cents a share, because of projected losses on exchange plans in 2015 and 2016. Hemsley noted tempered expectations for exchange enrollment, the failing of the co-ops and a worsening experience with its own claims as the causes for the dour projection.
Asked to respond, an Obama administration official said more Americans and insurers are participating in Obamacare each year. Nearly 1.1 million people have selected plans so far for 2016. Two-thirds are returning customers. And the average number of insurers per state has risen to 10 for 2016, up from eight in 2014, Obamacare's inaugural year.
"As we've seen during the first two weeks of open enrollment, every day, tens of thousands more Americans turn to the health insurance marketplace for health coverage and even more return to the marketplace for another year," said Aaron Albright, spokesman for the Centers for Medicare and Medicaid Services, which oversees Obamacare. "In fact, about 9 out of 10 returning consumers will be able to choose from three or more insurers for 2016 coverage."
