Major Blow To Obamacare: Nation's Largest Health Insurer May Exit Obamacare Exchanges By 2017

Jeffdunetz | November 19, 2015
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(Photo Credit: The Associated Press)

In what may turn out to be a major blow against Obamacare, United Healthcare, the nation’s largest provider of health insurance, announced Thursday it is scaling back marketing of its plans sold in the Affordable Care Act's exchanges, and may stop selling individual exchange plans altogether after 2016.

From a Modern Healthcare report:

UnitedHealth will evaluate its public exchange status during the first half of next year before deciding if it will leave the market. It has also “pulled back” significantly on marketing its 2016 plans and cut commissions to insurance brokers to minimize enrollment growth. 

According to an article published Thursday by The New York Times, United Healthcare is looking to leave the federal marketplace because they lost almost a half a billion dollars selling insurance via the exchanges:

While the company emphasized its other areas of business remained strong, such as offering coverage under Medicare private plans or handling claims for large employers, it said it was calculating a reduction of $425 million in profits this year because of projected losses from the online exchanges where it offers the coverage and was reducing its earnings estimate for 2015 to about $6 a share. The company also lowered its earnings estimates for 2016, citing anticipated losses.

The insurer's withdrawal from the Obamacare exchanges would force some 540,000 Americans to find coverage from another provider. 

United Healthcare pulling their plans comes amid news that almost half of the state-run Obamacare exchanges have bitten the dust. If other big insurance companies follow United HealthCare out the door, the loss could potentially destabilize the entire individual marketplace.

While Obamacare exchanges are a small part of United Healthcare's business, "three rival insurers—Aetna, Anthem and Humana—have a larger member count in this segment, according to Leerink Research," the Wall Street Journal reports. From the article: 

Ana Gupte, an analyst for Leerink Partners, told investors that she expected UnitedHealth and other insurers would leave the public exchanges if they could not break even by the first half of 2016. But she emphasized that she believed the administration could make changes to the law.

Ms. Gupte may believe that, but faced with a Congress still controlled by Republicans, it is doubtful that President Obama would be able to add even more money to the still unpopular program.