California: UnitedHealth to Exit State's Obamacare Market Amid Mounting Losses
Wednesday, 01 Jun 2016 09:00 AM
California state officials say U.S. health insurer UnitedHealth Group Inc. will leave the state’s Obamacare individual insurance market exchange, as business losses mount from the controversial program.
UnitedHeatlth has filed paperwork to offer plans in just six states’ health-law marketplaces next year, providing the most complete picture so far of its previously announced widespread withdrawal, The Wall Street Journal reported.
UnitedHealth is the largest U.S. health insurer and one of the biggest sellers of plans on the exchanges, which were created as part of President Barack Obama's national healthcare law.
The insurer said in April that it would pull out of all but a handful of the 34 states where it was selling the Affordable Care Act exchange plans.
“The smaller overall market size and shorter term, higher risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” the insurer said in a statement.
“Tuesday, California officials became the latest to say UnitedHealth was leaving, when a spokesman for the Covered California exchange confirmed that the insurer wouldn’t participate in 2017,” WSJ.com reported. UnitedHealth had about 1,200 Covered California enrollees, the spokesman told the Journal.
“In a posting Tuesday on a private website it maintains for brokers, UnitedHealth said “at this time, we have filed to offer On-Exchange products” in Nevada, New York and Virginia for 2017,” WSJ.com reported.
The company’s small Harken Health subsidiary, which builds plans around primary-care clinics, will sell plans in Georgia, Illinois and Florida on a “limited basis,” WSJ.com quoted the posting as saying.
UnitedHealth is expected to continue offering coverage to employers in California and to government workers and their families through the California Public Employees' Retirement System, CNNMoney reported.
UnitedHealth reportedly plans to soon tell consumers enrolled in its exchange plans in states where it will pull out. Existing plans are effective through the end of 2016, and consumers can switch to different insurers during the fall’s open enrollment period.
UnitedHealth, however, added it is “an advocate for more stable and sustainable approaches to serving exchange markets and those who rely on it for care.”
The company warned investors late last year that it was losing money on the new plans and might exit the market.
UnitedHealth CEO Stephen Hemsley has said that the shorter-term, higher-risk profile of the new members, as well as the smaller than expected enrollment, said UnitedHealth could not offer plans on a sustained basis, Reuters reported.
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Hemsley said in April the company expects losses from its exchange business to total more than $1 billion for this year and last. UnitedHealth 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.
The company has 795,000 customers from the exchanges, more than half of them new to UnitedHealth, it said. It expects about 650,000 members by year end.
The government said in February that more than 12 million people had signed up for Obamacare-related insurance through HealthCare.gov or a state-based exchange as of Jan. 31. Previous government expectations had been for more than 20 million people.
UnitedHealth will still probably sell ACA plans in at least three states next year: New York and Nevada have confirmed UnitedHealth’s participation and the company has filed plans to participate in Virginia.
Several other insurers, including state Blue Cross Blue Shield plans, have reported similar challenges in recent months, The Los Angeles Times reported. "And more than a dozen nonprofit insurance cooperatives created through the law have closed because they were overwhelmed by medical claims they couldn't afford," the Times said.
"But other insurers, including California-based Kaiser Permanente and Indiana-based Anthem, another major player in the California market, have been more bullish on the new marketplaces."
Other health insurers including Aetna Inc. and Anthem Inc. are also large players on the exchanges. In recent months they said they will continue to sell exchange plans.
Meanwhile, the state-based exchanges are a key element behind the Affordable Care Act's push to expand insurance coverage. But insurers have struggled with higher-than-expected claims from that business.
The Kaiser Family Foundation, in an analysis on the prospect of United's exit from state exchanges, said “the effect on insurer competition could be significant in some markets – particularly in rural areas and southern states” if it is not replaced.
(Newsmax wire services contributed to this report).
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