Wow: Nation's largest insurer may exit Obamacare due to losses

Insurers have had trouble signing up young and healthy individuals on the Obamacare exchanges, which is necessary to offset the costs of covering older and sicker enrollees. This has forced insurers to hike premiums, raise deductibles, and slash the number of doctors and hospitals offered on its plans. Meanwhile, the Obama administration has cut its enrollment expectations for 2016 to about half of what they were when the the legislation became law.

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The year 2017 is significant for insurers, because that’s the year when several programs designed to mitigate risk for insurers through federal backstops go away. The hope was that those programs would act as training wheels for Obamacare in its first few years of implementation, but after that, the insurers were supposed to be able to thrive on their own. UnitedHealth’s statement suggests otherwise.

If UnitedHealth and other insurers decide to exit, remaining insurers will be forced to take on even more high-risk enrollees, prompting them to either raise rates further or exit themselves. That in turn would deprive individuals of choices and remove competition, a key purpose of the exchanges.

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