United Health dropping out of most Obamacare exchanges after losing $1.1 billion

The nation’s largest insurer announced Tuesday it will be dropping out of the Obamacare exchanges in all but a handful of states. The decision comes after the company lost nearly half-a-billion dollars on the exchange business last year and expectations it will lose even more this year. The AP reports:


UnitedHealth Group Inc. said it now expects to lose $650 million this year on its exchange business, up from its previous projection for $525 million. The insurer lost $475 million in 2015, a spokesman said.

UnitedHealth has already decided to pull out of Arkansas, Georgia and Michigan in 2017, and Hemsley told analysts during a Tuesday morning conference call that his company will not carry financial exposure from the exchanges into 2017.

“We continue to remain an advocate for more stable and sustainable approaches to serving this market,” he said.

United was selling Obamacare plans in 34 states. The exact number of state in which it will continue to sell plans, as well as which states, was not revealed Tuesday morning.

Monday the Kaiser Family Foundation released a preemptive report which suggested United’s withdrawal from the marketplace would have an impact on competition but only a minimal impact on prices. However that analysis only looked at the immediate impact on pricing and did not estimate how having less competition in many counties might impact prices going forward.

The real concern is that United is only a sign of things to come as other big insurers decide Obamacare is a money loser and either opt out or demand large annual premium increases. From the Washington Post:


Even if the effects of United leaving most exchanges could be relatively modest, other insurers have indicated concern over the exchanges. Last month, the Blue Cross Blue Shield Association released a report indicating that new members who enrolled in individual plans used more medical services of all kinds and accounted for health care spending 22 percent higher than people with employer-based insurance in 2015.

At Aetna’s earnings call for the fourth quarter of 2015, Aetna chief executive Mark Bertolini said the insurer was concerned about the exchanges.

“This business remained unprofitable in 2015 and we continue to have serious concerns about the sustainability of the public exchanges,” Bertolini said.

Apart from the Obamacare exchanges, United’s business is strong. The company announced better-than-expected earnings in the 1st quarter.

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Jazz Shaw 10:01 AM on December 02, 2023