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UnitedHealth Exceeds Expectations for Quarterly Earnings, Will Withdraw From Most Obamacare Exchanges

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The company stunned the health insurance market last November by revealing that it was seriously considering leaving Obamacare after suffering $700 million or more in losses related to Affordable Care Act business.

The company, which so far is expected to halt participation in exchanges serving Arkansas, Georgia, Louisiana, Michigan and Oklahoma, had expanded its participation to 34 states this year, the AP reported Tuesday.

“Customers covered under an ACA-compliant health plan are sicker and use more medical services than individual customers have in the past”, the company said in a statement, adding the use of health care services exceeded projections.

UnitedHealth had moved slowly into the newly created market by participating in only four exchanges in their first year, 2014.

UnitedHealth said it expects to lose $650 million in the exchanges this year.

UnitedHealth insured 795,000 Americans through the exchanges at the end of March, the Associated Press reports.

Disclosure: UnitedHealthcare is a corporate sponsor of The Texas Tribune.

“I think there’s reason to believe we’ll still have quite a few competitors in a lot of the areas where we had them a year ago”, said Gary Claxton, a vice president with the Kaiser Family Foundation, which studies health care issues.

“The effect of a United withdrawal nationally would be modest”, the Kaiser report states, noting that an average health plan used as a benchmark would be about 1 percent more expensive if United had not participated in 2016. The company has previously said it lost $720 million on those exchanges in 2015.

“The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we can not broadly serve it on an effective and sustained basis”, CEO Stephen Hemsley said in a conference call with investors Tuesday. Three insurers is considered adequate to provide sufficient competition.

The Congressional Budget Office has projected that the ACA will cover about 12 million people this year, providing tax subsidies that help consumers afford insurance offered through the exchanges.

Athem, another major insurer participating in the Obamacare exchanges, has indicated that enrollment has not met expectations, but remains committed to participating in the healthcare program, in hopes that the markets will stabilize and become profitable.

Analysts expect other insurers to also trim their exchange participation in 2017, especially if they continue to struggle with high costs. Yet the company’s exit from the small business exchange would leave that market without a carrier that offers coverage across the state, MacEwan said in a memo to board members of the Washington Health Benefit Exchange. The company said revenue growth was attributable to growing market demand for UnitedHealth’s product and service offerings.

Kim Earnest

The author Kim Earnest

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UnitedHealth Exceeds Expectations for Quarterly Earnings, Will Withdraw From Most Obamacare Exchanges