Obamacare Gut Shot

Largest insurer may exit state exchanges after 2016

Shock waves continue to ripple across the U.S. health care landscape following Friday’s announcement from the largest private insurer in the country, UnitedHealth Group, that it might stop offering insurance under Obamacare’s state exchanges after 2016.

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The stunning news came during a conference call during which the company’s chief executive officer, Stephen Hemsley, updated the company’s earnings outlook. He told stockholders and analysts that $350 million of the company’s expected $500 million loss for the fourth quarter will be a result of its unprofitable insurance offerings under the Affordable Care Act (ACA).

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“The overall market profile for the state exchanges is more negative that we had planned,”  Hemsley said during the conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”

“United is the nation’s largest insurer. If it cannot sustain itself, it is doubtful other major insurers will be able to either.”

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While participation in state exchanges is optional for private insurance providers, UnitedHealth’s announcement suggests that smaller insurers within the exchanges might face similar financial realities as well.

“United is the nation’s largest insurer. If it cannot sustain itself, it is doubtful that the other major insurers will be able to either,” Sally Pipes, president and CEO of the Pacific Research Institute, said during a LifeZette interview.

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“Other major insurers in the U.S. include Anthem, Aetna and Humana. If these large firms cannot survive in the exchanges, the ACA will collapse as it will become unworkable.”

Though the largest insurance carrier in the country questions the ongoing sustainability of the ACA, the Centers for Medicare and Medicaid Services (CMS), which oversees Obamacare, maintains that everything is fine.

“This year, people looking for coverage in the marketplace continue to have a robust number of plan choices, and as the data shows, the marketplace is stable, vibrant and a growing source of coverage for new consumers. A statement by one issuer is not indicative of the marketplace’s strength and viability,” said Aaron Albright, director of media relations at CMS, in an email response to a LifeZette inquiry.

Others have a less optimistic prognosis of the marketplace under the ACA.

“The ACA is dying. It’s a failure. The question is how much more money will be dumped into this governmental money pit,” Dr. Ramin Oskoui, CEO of Foxhall Cardiology, said in an interview with LifeZette.

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“I suspect physician and hospital reimbursements will drop as there are fewer insurers in the marketplace. The remaining carriers will have near-monopolistic negotiation strength over other stakeholders such as physicians, patients, hospitals and drug manufacturers,” Oskoui said. “Physician and hospital networks will continue to be in flux. It’s difficult to know how this specifically will affect continuity of care for patients, but it won’t be good.”

Pipes, of the Pacific Research Institute, agrees that patients and overall health care outcomes will continue to suffer under the state exchanges as they’re currently configured.

“With fewer people signing up for coverage on the exchanges, the increase in the number of states expanding their Medicaid programs — which is now 31 — and 12 million new enrollees on Medicaid, many more people are using emergency rooms for their care. That’s the exact opposite outcome from what the president promised,” said Pipes. “Additionally, fewer doctors are taking Medicaid and Medicare patients because of low reimbursement rates. It appears that the Affordable Care Act is imploding under its own weight.”

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