UnitedHealth Group Inc.’s campus in Minnetonka, Minn. (Photo: AP)
UnitedHealth Group (NYSE: UNH), the nation’s largest health insurance provider, has pulled back on its marketing efforts for individual exchange products in 2016. In a statement released along with the company’s earnings report, the CEO said they are evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 if they will continue to participate in ObamaCare’s exchange markets in 2017.
“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,” said Stephen J. Hemsley, chief executive officer of UnitedHealth Group. “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.”
As PPD has repeatedly reported and explained, the risk pool associated with individual exchanges has grossly missed projections and expectations. Even previous and staunch supporters of the law, which includes most of the industry who recevied a bailout provision, are starting to face the reality of the law.
“The real issue is that our healthcare system is more screwed up because government now is playing a bigger role,” contends CATO economist and PPD contributor Dan Mitchell. “And keep in mind that fixing the problem means a lot more than simply repealing ObamaCare.”
Now, it’s beginning to hit the company’s bottom line. UnitedHealth said their revised 2015 net earnings outlook of approximately $6.00 per share reflects expected pre-tax earnings pressure of $425 million or $0.26 per share, including $275 million related to the advance recognition of 2016 losses. Yet, the rest of their operations are performing as expected if not better. Overall, UnitedHealth Group expects net earnings of $7.10 to $7.30 per share in 2016.
“The earnings pressure is driven by projected losses on individual exchange-compliant products related to the 2015 and 2016 policy years,” the statement said. “UnitedHealthcare remains a strong supporter of sustainable efforts to ensure access to affordable, quality care for all Americans, and has advocated publicly for this for more than 20 years, including as one of the first businesses to focus on serving people through managed Medicaid and Medicare.”
