The nation’s largest health insurer, UnitedHealth Group, announced last week that it was pulling back from seeking clients in insurance exchanges created by the Affordable Care Act. And it may bail completely from that marketplace 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, said in a company statement.

“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.”

The insurer also stated that it would "determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017."

Although the company has insured over 550,000 individuals in numerous markets though the new marketplaces, it would seem that it has added people who use medical care more. UnitedHealth also stated that people are signing up for coverage, receive care and then drop policies after they get better.

The company’s revised 2015 net earnings outlook of approximately $6.00 per share reflects anticipated pre-tax earnings "pressure" of $425 million or $0.26 per share, including $275 million related to the advance recognition of 2016 losses. The earnings pressure is driven by projected losses on individual exchange-compliant products related to the 2015 and 2016 policy years.

UnitedHealthcare only insures about 550,000 of the 9.9 million people who had insurance through the U.S and state-run insurance markets as of June 30, according to Bloomberg.

The two other large providers, Aetna and Anthem, both stated that they were not experiencing the same degree of problems that apparently have beset UnitedHealth. Aetna has about 1.1 million individual exchange members and Anthem has 824,000.

“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, according to Bloomberg. “We view it still as a big opportunity for the company.”

UnitedHealth's chief felt quite differently. “We cannot sustain these losses,” Hemsley, said during a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”

Last year Hemsley took in $66.13 million in compensation from the insurance giant he heads, up from $28.14 million in 2013, according to the Hartford Courant, citing a preliminary SEC proxy statement filed in April.

Business Affairs Homepage