UnitedHealth May Quit Obamacare in Blow to Health Law

By Zachary Tracer
BloombergBusiness, November 19, 2015

The biggest U.S. health insurer is considering pulling out of Obamacare as it loses hundreds of millions of dollars on the program, casting a pall over President Barack Obama’s signature domestic policy achievement.

UnitedHealth Group Inc. has scaled back marketing efforts for plans sold to individuals this year and may quit the business entirely in 2017.

While millions of Americans have gained coverage under Obamacare since new government-run marketplaces for the plans opened in late 2013, in UnitedHealth’s case they haven’t been the most profitable. Customers the company has added have tended to use more medical care. UnitedHealth also said today that some people are signing up for coverage, getting care and then dropping their policies.

“We cannot sustain these losses,” Chief Executive Officer Stephen Hemsley told analysts on a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”

UnitedHealth said it expects as much as $500 million in losses on the Obamacare plans in 2016.

While UnitedHealth has been slower than some of its rivals to sell Obamacare policies, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.

“If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise,” Skolnick said.

Anthem and Aetna have said they’ll be patient as the exchange business develops, and that they expect it to eventually become profitable.

“It’s way too early to call it quits on the ACA and on the exchanges,” Aetna CEO Mark Bertolini said on an Oct. 29 conference call. “We view it still as a big opportunity for the company.”

Still, Bertolini said the market “remains challenging,” and Aetna reduced the number of states where it sells coverage to 15 for next year from 17.

Anthem said in late October that the company may need to wait until 2017 or 2018 for the individual exchange business to improve.


The Affordable Care Act was designed by the nation’s largest insurers to serve the interests of the nation’s largest insurers. It was almost as if the patients were not much more than a necessary nuisance, required only because an insurance market requires patients to purchase their plans. How is it working out for the insurers?The largest insurer in the nation – UnitedHealth  – has scaled back their marketing of ACA exchange plans and is considering totally exiting the exchanges by the end of next year. Two of the other largest insurers – Anthem and Aetna – have yet to profit from the exchanges and are waiting to see if the exchange business will improve before they decide about the future.

It is no secret what happened. The insurers had to agree to crucial reforms in the insurance market. They had to accept higher cost individuals with preexisting disorders; they had to cover ten categories of health care benefits; they had to limit excess administrative costs and profits by agreeing to minimum medical loss ratios, and they had to submit higher premium increases to insurance regulators for greater public scrutiny.

In other words, they had to agree to market basic insurance products to anyone who was eligible for them. With these requirements, premiums would be unaffordable for all but the wealthy. Thus ACA was crafted to keep premiums down by making lower actuarial value plans the standard – requiring greater cost sharing by patients, though with government subsidies for lower-income individuals. ACA also was crafted to provide government subsidies for the premiums to assist lower-income individuals with the purchase of these plans. That still was not enough so they used the leverage of narrow provider networks to contract for cheaper medical services, and they increased the deductibles, shifting more of their costs to patients.

Guess what. It isn’t working – for the insurers or the patients. Congress dumped on us an administratively complex system that has made it almost impossible for the insurers to offer a product with affordable premiums that still meets the basic plan elements required by the legislation. For the patients, the premiums and deductibles are not affordable for the average family, and they have had to give up their health care choices because of the narrow networks selected by the insurers.

Congress and the Obama administration did this one for the insurers. Yet the insurers are beginning to back out now. That’s just fine because it will allow us to replace them with a financing plan that is designed for patients instead. A well designed single payer national health program would make health care affordable for everyone while returning to them their choices in health care delivery.