UnitedHealth is the biggest health insurance provider of the country and they announced a few weeks ago that they would be offering insurance plans through the exchanges included in the Affordable Car Act’s policy. However, it seems that the company is now going back on its word, saying that the move would not only be strenuous to their own profit, it could actually break the company.
According to Stephen Hemsley, CEO of UnitedHealth, “We cannot sustain these losses. We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
With regards to their 2015 profit, the company has also decide to lower their net earnings outlook, with Hemsley saying, “In recent weeks, growth expectations for individual exchange participation have tempered industrywide, cooperatives 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.”
The actions of UnitedHealth doesn’t seem to sit well with analysts though. Many of them are quite puzzled by the decision of the company.
President of the Rauser Agency in Milwaukee and Mequon Jon Rauser said, “I can’t explain the about-face.”
Todd Catlin of Transition Health Benefits said, “They’re really well run. What’s really weird is to go into it (the exchanges) full bore, and two weeks later say they might be getting out. I don’t know what happened. They must have seen something in their internal data that did not bode well.”
Just a few weeks ago, health insurance brokers were actually invited to a training session with regads to the insurance exchange by United Health. Vice President of the Rauser Agency Chris McCardle said, “I left there energized. I thought we were going to do a fair amount of business with them this fall.”
When they were told that the decision was reversed by the company though, McCardle said, “We were very surprised. … It was really disappointing. Puzzling and frustrating.”
This new development has also renewed some fears about what the Affordable Care Act will do to the health insurance industry, particularly with those on the smaller scale which really don’t have the money to protect them from clients who stop paying premiums after they are discharged from the hospital with a huge medical bill. It’s a fact that the ACA is good for a lot of the customers, but anything that affects the insurance companies themselves will bound to have an effect on the consumer base.
In fact, if things keep going at this rate and insurance companies can’t keep up with the changes that the ACA demand, there might even be some policy changes that will occur in the next administration.