At the end of 2016, UnitedHealth Group could make a decision that would leave more than half a million Americans looking for health coverage. UnitedHealth, the country’s largest health insurer, covers more Americans than any other insurer, but low enrollment totals and waning profits have motivated the organization to consider a departure from Obamacare.
Signed into law in March of 2010, Obamacare created an interconnected system of federal and state exchanges to help insure individuals who weren’t insured via their employers. This enrollment typically came with subsidies and tax credits, and participation by insurers was optional.
UnitedHealth was the largest and most formidable organization who joined the exchange. However, recent charting of Obamacare showed an enrollment rate far below their initial expectations, along with high usage that has cost the company significant amounts of money. At the start of the fourth quarter, the organization briefed investors on a potential $425 million downturn in revenue, and in 2016 alone, they’re expected to lose upwards of $600 million on Obamacare policies.
“We see no data pointing to improvement,” United CEO Stephen Hemsley said. He cited market data, which predict higher risks and more difficulties in the future. “In recent weeks, growth expectations for individual exchange participation have tempered industrywide.”
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United’s announcement comes as a shock to the marketplace. Hemsley and the organization had previously expressed optimism and enthusiasm for the plans, but with profits trending downward and costs trending upward, United thinks it’s in their best interest to move on.
The problem with the plans, Hemsley contests, is flexibility. People who purchase insurance through public exchanges are typically the type to heavily and frequently use their plans. This includes patients who have recently lost a job, had a baby or experienced other significant changes in their lives. This has driven usage to heights that United hadn’t expected, and when these people are healthy or stabilized, they tend to discontinue their coverage.
United has already pledged to offer Obamacare exchange plans during 2016, but their stock shares are down almost 6%. They’ve curtailed marketing and eliminated commission for bring-in new patients, all in an effort to dissuade the public from enrolling and to staunch profit loss. They’re not alone. Companies like HCA Holding, Insurers Aetna, Tenet Healthcare and Anthem have all experienced significant drops in stock—some as high as 8%.
“Co-operatives have failed,” Hemsley said, referring to the fact that more than half of Obamacare’s original 23 co-operatives have collapsed or pulled away. Of the remaining co-ops, most of them are like UnitedHealth—caught in precarious financial situations that may lead to their eventual abandonment of Obamacare.
