UnitedHealth chopped its 2015 earnings forecast and the nation’s largest health insurer has begun to question its future in public insurance exchanges, a key component in the nation’s health care overhaul.
The company said Thursday that it would pull back on the marketing of its exchange business a few weeks after open enrollment for that coverage began nationwide under the Affordable Care Act, known as “Obamacare.” The company also said that it will decide in the first half of next year “to what extent it can continue to serve the public exchange markets in 2017.”
“We cannot sustain these losses,” CEO Stephen Hemsley said Thursday. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
Hemsley told investors Thursday that the company doesn’t intend to take further losses from this business in 2017.
In Louisiana, UnitedHealth covers about 1,280 people under “Obamacare,” compared with 7,485 by Aetna and 6,840 by Humana — all of them dwarfed by the 175,000 covered under various Blue Cross and Blue Shield of Louisiana plans.
State-based health insurance exchanges and a federal marketplace for states such as Louisiana that didn’t start exchanges opened a few years ago as a way for customers to buy individual health insurance, many with help from income-based federal tax credits.
The exchanges offered a potential growth boom for insurers but also risk because UnitedHealth and others had little sense of the health needs of new customers. They also didn’t know whether the new business would attract enough healthy customers to balance the expected enrollment of sicker customers who had not been able to find coverage before.
That has been one of the complaints recently by Blue Cross and Blue Shield of Louisiana. Officials said the plans in its individual market are costing more for health care, taxes and expenses than customers pay in premiums and that the plans are losing millions of dollars.
The company emphasized that it is strong financially and can easily absorb those losses, but can’t do so forever. Insurance Department records show Blue Cross and Blue Shield of Louisiana ended 2014 with a $1.1 billion surplus.
An Blue Cross official said the Affordable Care Act doesn’t do enough to encourage healthy people to buy coverage, while allowing people to buy coverage outside the open enrollment period who often are in need of expensive medical care.