UnitedHealth Group, the biggest health insurance provider in the U.S., announced that it may exit the individual insurance exchanges made under the Obamacare program.
As reported by Reuters, the company said that weak enrollment and high medical costs for exchange members were taking too big a toll on its performance, adding that it will evaluate during the first half of 2016 on whether it will offer Obamacare plans in 2017.
In addition that, competitors such as Aetna Inc. and Anthem Inc. have also said that they were seeing few people enrolling in insurance programs, but did not say whether they were considering to exit the business.
UnitedHealth CEO Stephen Helmsley said, "We cannot sustain these losses, we can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."
In addition, according to a similar report by the Milwaukee Journal Sentinel, Helmsley said that UnitedHealth is revising its 2015 earnings outlook due to the exchange-compliant policies it provides.
He also said that in recent weeks, growth expectations for individual exchange participation tempered the industry. He lamented that cooperatives have failed and the market data has signaled higher risks and more difficulties while their own claims experience has deteriorated, leading to them taking this proactive step.
Moreover, a deterioration in the exchanges in the middle of the 2016 election campaign can give Republican candidates reasons to oppose the health care law created by U.S. President Barack Obama.
Democrats could also face pressure if the UnitedHealth and other parties depart the exchanges because less competition could mean higher insurance premiums.
But the U.S. government said the exchanges were growing, giving millions of Americans access to affordable insurance. As noted, Enrollment for 2016 opened earlier this month.
According to U.S. Department of Health and Human Services spokesman Ben Wakana,"We continue to see more people signing up for health insurance and more issuers entering the marketplaces," he also said, "Today's statement by one issuer is not indicative of the marketplace's strength and viability."
In connection, the insurance company's shares fell 5.5 percent on Thursday, while Aetna lost 7.2 percent and Anthem dropped 6.4 percent. In connection, shares of hospital operators that benefited in recent years from an increase in insured patients, also fell, with HCA Holdings down by 5.9 percent and Community Health Systems by 8.5 percent.
As reported by The Washington Post, if UnitedHealth did exit the Obamacare market this year, the immediate impact would be too small to topple the exchanges, according to analysts. In addition, this announcement was said to be more important for what it implies about the ability of even well-established insurance companies to thrive in marketplaces.
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