UnitedHealth Group Pulls Out Of ‘Obamacare’ Exchanges Amid Big Losses

UnitedHealth Group, the largest health insurer in the U.S., will withdraw from ObamaCare exchanges in most U.S. states. The move comes amid fears of huge financial losses for the health insurer, UnitedHealth’s CEO announced today that the company expects its losses from health insurance exchanges to top $1 billion dollars later this year.

“We continue to remain an advocate for more stable and sustainable approaches to serving this market,” said UnitedHealth CEO Stephen Hemsley, in a statement today.

According to Fox News, the health insurance giant UnitedHealth Group expects to lose around $650 million this year as a result of its participation in state-run healthcare exchanges, which provide health insurance to many Americans who are otherwise unable to afford coverage.

UnitedHealth Group will pull out of most of the 34 states where the health insurance giant currently provides coverage through state insurance exchanges as mandated by the Affordable Care Act – a law which UnitedHealth Group CEO Stephen Hemlsey blames for the financial setbacks UnitedHealth expects to face this year – stating that he doesn’t want UnitedHealth to continue to take the financial risk which comes along with participation in the health insurance exchanges, reports Fox News.

Critics of UnitedHealth Group’s move to pull out of the state insurance exchanges say the health insurance giant could leave many – potentially millions – of Americans without any real choice for health insurance. According to the Washington Post, if UnitedHealth Group pulled out of all 35 states where it currently provides coverage, around 1.1 million Americans would have only one choice of healthcare provider. Still, critics of UnitedHealth say that this is a problem many insurers are having, with lower-than-expected returns from so-called “high-risk” customers.

“This is an industry problem. A lot of them are losing money in a number of states, I think United will probably be the most bold in terms of exits,” says Ana Gupte, a healthcare analyst at Leerink Partners.

Gupte states that UnitedHealth’s decision to pull out of state insurance exchanges will likely have a minor impact on the health of the company as a whole, as only a small portion of the company’s business comes from the state health insurance marketplaces. Insurers like Aetna and Anthem, on the other hand, receive a much larger share of their income from the state marketplaces.

“I don’t know what a ‘handful’ means, but it does sound like a pretty big pullout. But since we don’t know which markets it is – we know some of them but we don’t know many of the others – we don’t know how big a deal it is in terms of competition,” said Gary Claxton, vice president at the Kaiser Family Foundation.

Other insurers share UnitedHealth Group’s fears that the marketplaces could potentially cause significant financial losses for participating companies. According to the Washington Post, Blue Cross Blue Shield released a report suggesting that new members who purchased individual plans used more medical services and accounted for a significantly higher amount of healthcare spending than customers who held employer-based insurance.

“This business remained unprofitable in 2015, and we continue to have serious concerns about the sustainability of the public exchanges,” said Mark Bertolini, an executive at Aetna.

Aetna earns a much greater amount of its profits from healthcare marketplaces than other insurers like UnitedHealth Group, and as a result the company has been much more hesitant about the kind of dramatic pull-out that UnitedHealth has planned for later this year.

“I don’t think the exit of this carrier is, in and of itself, a threat to the overall market. It’s a message, to me it’s a sign of a process of evolution where the sellers really have to change what they do to make money in this market, and they’re starting to,” said Katherine Hempstead of the Robert Wood Johnson Foundation, stating that UnitedHealth’s pullout will be a big deal, but it won’t cause lasting hardship for Americans who rely on the insurance exchanges.

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