Biggest Health Insurer UnitedHealth May Leave Obamacare Exchanges

UnitedHealth Group Inc (NYSE:UNH) is planning to leave from the individual insurance exchanges.

The company is struggling to make profit by joining the exchanges created under the Affordable Care Act. It is concerned about weak enrollment and high medical costs for exchange participants.

On Thursday, the insurer said that it is pulling back on its marketing efforts for individual exchange products in 2016. The company has yet to make a decision about its exit from the public exchanges. It will be evaluating the viability of the insurance exchange product segment, and will make a decision during the first half of 2016.

More than 500,000 Americans bought insurance coverage from UnitedHealth under the program.

UnitedHealth may become the first major insurer to leaves the marketplace. Its exit from exchanges would raise concerns about the program’s stability.

“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,” UnitedHealth Group CEO Stephen J. Hemsley said in a statement.

With over 500,000 members with Obamacare plans, UnitedHealth is the fourth-largest insurer on the exchanges.

UnitedHealth said that these Obamacare plans could cut its fourth-quarter profit by $425 million, or 26 cents per share. As a result, the company lowered full-year 2015 earnings-per-share forecast to $6, versus $6.25 to $6.35.

Shares of UnitedHealth’s stock fell by 5.60% to $110.68 on Thursday.

The Federal government is optimistic about the exchanges, which they believe are growing and allowing millions of Americans get affordable insurance coverage.

For 2016, enrollment through exchanges started earlier this month.

The exchanges are operating in all 50 states and the District of Columbia. Over 9 million people have been registered through these exchanges.

For its third quarter ended September 30, UnitedHealth’s profit was $1.69 billion, compared to $1.59 billion for the subsequent quarter.

Image Source: Will O’Neill/Flickr


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