In a surprise announcement, the nation’s largest health insurer said it’s scaling back its marketing efforts of insurance plans offered under the Affordable Care Act and warned that it may pull out of Obamacare altogether.
UnitedHealth also lowered its profit expectations for the year, blaming what it calls the continued deterioration of its individual insurance plans offered through the government-run exchanges established by the ACA.
“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 CEO Stephen Hemsley said in a statement.
The exchanges offer insurance plans to Americans who don’t have coverage through their employer. Insurers’ participation in the health care exchanges is optional.
This is a significant shift for UnitedHealth, which recently announced plans to expand its exchange offerings, Bloomberg reports. UnitedHealth covers about 555,000 of the nearly 10 million Americans who have insurance through the ACA exchanges.
“[UnitedHealth] is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017,” UnitedHealth said in a statement.
UnitedHealth’s announcement is the latest in a series of blows to Obamacare. Several nonprofit cooperative insurers funded by Obamacare folded this year, and some insurers say they’ve been forced to hike premiums to cover higher-than-anticipated costs for exchange plans.
“People who purchase insurance through the public exchanges are typically heavy users of their plans, draining insurers’ profits,” according to USA Today.
Still, Kaiser Family Foundation senior vice president Larry Levitt told USA Today that although UnitedHealth’s announcement is potentially a big one, it “matters more for what it says about what [the] industry as a whole thinks of Obamacare.”
“If [UnitedHealth] exited (the exchanges), it wouldn’t matter that much to the functioning of the ACA, but it would show why increasing enrollment is so important,” Levitt said. “This market is not yet profitable for insurers but it could become profitable if enrollment grows.”
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