UnitedHealth Could Leave ACA Insurance Exchanges in 2017

Due to poor performance on the Affordable Care Act’s health insurance exchanges, UnitedHealth Group has revised its expected earnings for 2015. In addition, UnitedHealthcare has pulled back marketing efforts for the individual exchange products and is evaluating whether it will continue to serve the public exchange markets in 2017.

“In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step,” Stephen J. Hemsley, chief executive officer of UnitedHealth Group, said in a statement.

The company’s revised earnings are driven by projected losses on products in the individual exchange related to 2015 and 2016. UnitedHealth had previously expanded exchange offerings to 11 new states for 2016, bringing it to a total of 24 states and covering about half a million people in these plans.

Although, UnitedHealth hasn’t made the decision to exit the public insurance exchanges just yet, Hemsly seemed bearish on the outlook for the exchanges.

“We cannot sustain these losses," he said in a conference call. “We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself.”

This announcement is a sharp departure from just a month ago when the company’s chief financial officer gave no indication in a conference call that performance in the exchanges was deteriorating, as the company now claims.

“We will expand to 11 new markets in 2016, and we continue to expect exchanges to develop and mature over time into a strong, viable growth market for us,” David Wichmann said in October.

Despite UnitedHealth’s concerns over the public exchanges, it has seen strong growth momentum and performance in all other benefit market segments and remains committed to its Medicaid business.