UnitedHealth Group (NYSE: UNH) — parent company of UnitedHealthcare, the nation’s largest health insurer — today warned it may stop selling its individual insurance plans on the public state health exchanges that are a key component of the Affordable Care Act (ACA), or Obamacare.
UnitedHealthcare, which is Central New York’s third largest health insurer ranked by members, has slashed its current marketing efforts to attract consumers to its ACA-compliant plans for the 2016 plan year and will decide next year how much it wants to participate in the state exchanges in 2017.
“UnitedHealthcare has pulled back on its marketing efforts for individual exchange products in 2016,” the insurer said in a news release. “The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.”
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UnitedHealth Group also announced it is revising down its earnings outlook for 2015 by about $6 per share, reflecting “expected pre-tax earnings pressure of $425 million,” including $275 million from “advance recognition of 2016 losses.” The company said the earnings revision was due to “projected losses on individual exchange-compliant products related to the 2015 and 2016 policy years.”
The health insurer’s move comes amid slowing growth in individual sign-ups for commercial ACA health plans, rising premiums, and increased costs for insurers as those who do enroll in the plans tend to run up larger medical bills.
“In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives 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,” Stephen J. Hemsley, CEO of UnitedHealth Group, said in the news release. “We continue to be pleased with the growth and overall performance of our company outside of the individual exchange products and look forward to strong, positive and broad based earnings growth across our enterprise in 2016.”
UnitedHealthcare’s move may be a big blow to the individual-insurance market component of the national health law, say investors and analysts.
“This is very damning for ACA,” Jim Cramer, CNBC TV personality and former hedge-fund manager, said on the financial cable network’s “Squawk on the Street” program this morning. “This is staggering.”
UnitedHealth Group’s stock price plunged more than 5 percent in Thursday’s trading. And, the shares of other large commercial health insurers — Aetna, Humana, and Anthem — also fell by between 4 percent and 7 percent.
New York State of Health
In New York state, UnitedHealthcare had a 2 percent share of enrollments on the individual marketplace of New York’s state health exchange in the 2015 plan year, according to a July 2015 open enrollment report from the New York State of Health. That ranked it 11th. In comparison, Excellus BlueCross BlueShield was 10th with a 4 percent share, MVP Health Care ranked 6th with a 6 percent share, and Fidelis Care was 1st with a 20 percent share.
And nationally, UnitedHealthcare covers about 6 percent of people buying individual plans on the state health-insurance marketplaces.
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