Completely Unexpected (Nothing About The Bakken) -- November 19, 2015

Updates

January 19, 2016: UnitedHealth posts 4th-quarter earnings of $1.22 billion, beating analysts' expectations. UnitedHealth Group's 4th quarter profit drops 19%, still tops forecasts due to growth in its pharmacy benefits management business.



December 1, 2015: UnitedHealth Group/CEO regrets "getting into" Obamacare.

The CEO of UnitedHealthCare on Tuesday said he regretted the decision to enter the ObamaCare marketplace last year, which the company says has resulted in millions of dollars in losses.

“It was for us a bad decision,” UnitedHealth CEO Stephen Hemsley said at an investor’s meeting in New York.

UnitedHealth, the country’s largest insurer, announced last month that it would no longer advertise its ObamaCare plans over the next year and may pull out completely in 2016 — a move that sent shockwaves across the healthcare sector.

Hemsley’s remarks double down on his earlier warning that the ObamaCare exchanges remain weaker than expected after two years and that it will take far longer for insurers to profit from the millions of new enrollees. 

The company had already eyed ObamaCare’s federal marketplace cautiously since it launched in 2013. UnitedHealth only began selling plans on the exchanges last year.

Now, UnitedHealth officials have said that move will result in a half-billion dollars in losses over two years.

November 20, 2015: wow, this is really getting bad. Over at Bloomberg:

This was part of a terrible, horrible, no good, very bad news cycle for Obamacare; as ProPublica journalist Charles Ornstein said on Twitter, “Not since 2013 have I seen such a disastrous stream of bad news headlines for Obamacare in one 24-hour stretch.” Stories included not just UnitedHealth’s dire warnings, but also updates in the ongoing saga of higher premiums, higher deductibles and smaller provider networks that have been coming out since open enrollment began.

It now looks pretty clear that insurers are having a very bad experience in these markets. The sizeable premium increases would have been even higher if insurers had not stepped up the deductibles and clamped down on provider networks. The future of Obamacare now looks like more money for less generous coverage than its architects had hoped in the first few years.

Original Post

 

This is completely unexpected. I had expected all the small players, all the under-capitalized insurers, all the co-ops to drop out and leave ObamaCare to three or four national insurers, moving closer to a single company (or two or three companies) transferring all of America's health care dollars between consumer and provider, a "one-payer" system as it were. But apparently that may not happen. One of those three or four largest health insurers may drop out of ObamaCare. Bloomberg is reporting:

The U.S.’s biggest health insurer is considering pulling out of Obamacare, a month after saying it would expand its presence in the program.

UnitedHealth Group Inc. is scaling back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the business entirely in 2017 because it has proven to be more costly than expected. It’s an abrupt shift from October, when the health insurer said it was planning to sell coverage in 11 new markets next year, bringing its total to 34. The company also cut its 2015 earnings forecast.

A pull-back would deal a significant blow to President Barack Obama’s signature domestic policy achievement. While UnitedHealth has been slower than some of its rivals to sell Obamacare policies since new government-run marketplaces for the plans opened in late 2013, 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

UnitedHealth said it suspended marketing its individual exchange plans and is cutting or eliminating commissions for brokers who sell the coverage.

If UnitedHeath Group pulls out this will be a game changer. The article may or may not explain why the insurers "are struggling" -- I didn't read the entire article -- but I have my hunches. But my opinions and a $1.98 will get you a tall (small) cup of coffee at Starbucks.

Another 550,000 people could all of a sudden find themselves having to scramble once again looking for health insurance.

I track the ObamaCare debacle here.