Citizen WElls

UnitedHealth Group pulling out of Obamacare exchanges?, Expects major losses on its business through Affordable Care Act, Other insurers sounding alarms about their exchange business, Many insurers have raised premiums to cover medical costs of enrollees

“If you’ve got health insurance we’re going to work with you to lower your premiums by $2,500 per family per year. We will not wait 20 years from now to do it, or 10 years from now to do it. We will do it by the end of my first term as president.”…Barack Obama

“Dean Griffin liked the health insurance he purchased for himself and his wife three years ago and thought he’d be able to keep the plan even after the federal Affordable Care Act took effect.

But the 64-year-old recently received a letter notifying him the plan was being cancelled because it didn’t cover certain benefits required under the law.

The Griffins, who live near Philadelphia, pay $770 monthly for their soon-to-be-terminated health care plan with a $2,500 deductible. The cheapest plan they found on their state insurance exchange was a so-called bronze plan charging a $1,275 monthly premium with deductibles totalling $12,700. It covers only providers in Pennsylvania, so the couple, who live near Delaware, won’t be able to see doctors they’ve used for more than a decade.”…Times Colonist November 2, 2013

“We are being lied to on a scale unimaginable by George Orwell.”…Citizen Wells

From Market Watch November 19, 2015.

“UnitedHealth Group Inc. said it expects major losses on its business through the Affordable Care Act’s exchanges and will consider withdrawing from them, in the most prominent signal so far of health insurers’ struggles with the health law’s marketplaces.

The disclosure by the biggest U.S. health insurer, which had just last month sounded optimistic notes about the segment’s prospects, will sharply boost worries about the sustainability of the law’s signature marketplaces, amid signs that many insurers’ losses on the business continue to mount.

UnitedHealth Group’s chief executive, Stephen J. Hemsley, said it made the move, which included a downgrade of its earnings projections for 2015, amid reduced growth expectations, the expected shutdowns of the majority of the health law’s nonprofit cooperative insurers, and signs that its own enrollees continue to increase their use of medical services, raising costs.
As a result, UnitedHealth said it is pulling back on marketing its exchange products, as open enrollment is currently under way for plans that will take effect in 2016. And the insurer said it is “evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.” UnitedHealth had previously expanded its exchange offerings to 11 new states for 2016, and said in October it had around 550,000 people enrolled.

UnitedHealth said it was revising its 2015 earnings projection to $6 a share, from a previous range of $6.25 to $6.35. The move reflected “pressure” of $425 million, or 26 cents a share, tied to individual plans sold under the health law, it said. The $425 million includes $275 million related to the “advance recognition” of losses it expects to incur in 2016. UnitedHealth also said it expects its 2016 earnings to be between $7.10 and $7.30 per share in 2016; previously, the company said it thought next year’s earnings would be within the range of analysts’ projections, then around $7.09 to $7.55.

Chris Rigg, an analyst with Susquehanna Financial Group, wrote that it was likely “this is more of an industry issue,” and if the exchanges don’t stabilize, he would expect UnitedHealth to “exit this business line.”

UnitedHealth’s announcement comes as other insurers have been sounding alarms about their exchange business, but the big insurer went considerably farther than its peers in flagging the recent rapid deterioration of its performance and raising concerns about future viability. UnitedHealth also changed its own tone markedly from its Oct. 15 earnings call, when it said it expected “strikingly better” results on the exchanges in 2016, due partly to price increases that it said averaged in the double digits.

The impact of the insurance industry’s struggles is already clear in the products currently on offer in the marketplaces, many of which are aimed at stanching a flood of red ink. For these plans, which will take effect in 2016, many insurers have raised premiums in order to cover the medical costs of enrollees, which have run higher than many companies originally projected, fueling this year’s losses. Insurers have also shifted to offering more limited choices of health-care providers. The majority of the startup cooperative insurers created under the health law are slated to shut down.

Analysts say the danger is that higher rates might discourage enrollment, particularly by the younger, healthier consumers that the marketplaces need to draw in, since they are the ones that are most likely to feel they can go without insurance. That would have the effect of driving premiums even higher in the future, because insurers would need more rate increases to cover the costs of a smaller, sicker pool of enrollees. At its worst, this cycle can feed on itself, creating what the industry calls a “death spiral.””

Read more:

http://www.marketwatch.com/story/unitedhealth-cuts-guidance-citing-obamacare-2015-11-19