A slow exit for UnitedHealth from ObamaCare?

Five months ago, the nation’s largest health insurer warned that the economic models of ObamaCare look so bad that it might end its individual-policy business altogether. Now it looks as though UnitedHealth Group has begun to make good on its threat. The insurer has pulled out of two markets, Georgia and Arkansas, in a sign that the instability of the ObamaCare system may still be increasing:


UnitedHealth Group plans to exit the exchanges in Georgia and Arkansas, both states confirmed to The Hill on Friday.

The company’s decision to pull out of the two state marketplaces comes after the company first threatened to drop out of unprofitable markets last November.

While UnitedHealth Group already had a limited scope in ObamaCare plans, its decision to make good on earlier threats is a sign of trouble for marketplaces around the country.

The company had only entered the market in Arkansas last November, and did not provide a reason for leaving in 2017.

“I don’t know what their mindset is,” said Ryan James, a spokesman for the Arkansas Insurance Department, who confirmed the company’s exit.

Last November, a Bloomberg panel predicted “serious political fallout,” but for the most part it failed to materialize. That might have been because UnitedHealth hadn’t acted yet, or maybe because of the presidential election, but this will get attention in Georgia and Alabama, at least:

The media in Georgia, at least, is paying attention now:

It said in January that it had lost $720 million nationally on its individual-market health plans in 2015, the first year the company participated in health insurance exchanges.

The insurer said the losses stemmed from sicker-than-average consumers enrolling in its health plans and a surplus of people signing up beyond the regular enrollment period. The insurer ended last year with about 500,000 enrollees in exchange plans.


One major factor has been irregular enrollments — people signing up for insurance outside of the regular enrollment period. At one time, the ACA was supposed to allow for ad hoc enrollments, but the final version required people to enroll annually in order to ensure that they paid premiums regularly, not just when they got sick or injured. UnitedHealth has discovered that the restrictions are in name only, which is one reason their utilization curve has been worse than predicted:

The law established an enrollment window, officially known as an open enrollment period, to prevent people from simply waiting until they became sick before they bought insurance. But insurers say it has become too easy for customers to sign up past the proper deadline. …

Bill Custer, a health insurance expert at Georgia State University, said Friday that United “obviously is making a business decision on where to put their resources.”

The company and other insurers feel that the enrollment rules are “too easy to game the system,” he said.

The ease of irregular enrollments comes as a result, no doubt, of the political pressure felt by the Obama administration to goose its enrollment figures. It’s no secret that the enrollment figures have been disappointing. Democrats touted the system as a way to get 40 million uninsured Americans covered, but only 12 million have bothered to enroll at all, and that’s short of the 13 million that the White House projected for 2016. On top of that, the CBO expects the number of uninsured to rise over the next decade:


The office projected in January that 13 million people would be enrolled in health care policies through Obamacare marketplaces. However, the most recent report finds that 12 million people will be covered.

“About 13 million people selected plans through the marketplaces in 2016 by the close of the open-enrollment period; however CBO and [the Joint committee on Taxation] estimate that, in any given month, an average of about 12 million people will be covered by insurance purchased through the marketplaces,” states the report.

The office also projects that from 2017 to 2026 the number of uninsured individuals is expected to rise from 26 million to 28 million.

More employers are expected to cease providing insurance for their employees as a result of the Affordable Care Act. While the office estimates that 155 million people will have coverage through their employer in 2016, that number is expected to decline to 152 million in 2019.

With that kind of performance, does anyone expect HHS to strictly enforce “life event” claims? They need all of the enrollments they can get — which means that ObamaCare will continue to be a disaster for insurers, and for the consumers who get squeezed by skyrocketing premiums and absurd deductibles. If this cycle continues, there may not be an individual market much longer in some states — or employer-based insurance consumers will start paying for the losses in the ObamaCare markets.


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