It’s Working: UnitedHealth Bolts From Obamacare Market In Two States

Matt Vespa
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Posted: Apr 14, 2016 2:28 PM
It’s Working: UnitedHealth Bolts From Obamacare Market In Two States

Guy had a more in-depth post about the latest string of Obamacare disasters, with the most significant relating to UnitedHealth. They warned us in December of 2015–UnitedHealth is backing out of two Obamacare markets after disastrous losses were inflicted upon them due to President Obama’s Affordable Care Act. Katie reported last year that the health insurer might pull out of the individual market altogether by 2017, noting that participating in this market has cost them hundreds of millions of dollars (via WaPo):

UnitedHealth Group, the largest U.S. health insurer, has decided to call it quits in two state Obamacare markets in the latest challenge to President Obama’s health-care overhaul.

The insurer won’t sell plans for next year in Georgia and Arkansas, according to state insurance regulators. Tyler Mason, a UnitedHealth spokesman, confirmed the exits and declined to say whether the company would drop out of additional states.

Many insurers have found it difficult to turn a profit in the new markets created by the Affordable Care Act, under which individuals turned out to be more costly to care for than the companies expected.

UnitedHealth and Aetna both posted losses from the policies last year, as did big Blue Cross and Blue Shield plans in states such as North Carolina.

UnitedHealth began warning in November that it might exit ACA markets as it racked up losses. In December, the company said it should have stayed out of the individual exchanges longer.

In North Carolina, Blue Cross Blue Shield has suffered tremendous losses. In February, Blue Cross and Blue Shield of North Carolina president and CEO J. Bradley (Brad) Wilson said that five percent of their ACA patients “consumed” $830 million in health care costs–that’s the sickest five percent they had in the state. They only received $75 million in premiums and that’s including the subsidies. It’s simply not a sustainable business model. Wilson noted that the future of Blue Cross Blue Shield’s participation in the ACA market will depend on the increase in rate estimates due this fall.