This early morning disclosure by the nation’s largest insurer highlights the difficulties insurers are having with the marketplaces created by the Affordable Care Act and will fuel concerns regarding the long-term sustainability of the exchanges.
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. (Wilde Mathews, 11/19)
The nation’s largest health insurer said it was “evaluating the viability of the insurance exchange product segment,” pulling back on its marketing efforts for individual exchange products for next year and “will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.” The insurer sells individual plans on public exchanges in 24 states and covers more than a half million Americans in these plans. (Japsen, 11/19)
Insurers have struggled to profit from the government-run marketplace created by Obamacare. Anthem Inc. last month said some rivals were offering premiums too low to provide the coverage patients require and book a profit. “We can expect other participants to guide to the same experience,” Sheryl Skolnick, an analyst at Mizuho Securities, said in a note. The Minnetonka, Minnesota-based company “is insulated in part from the exchange issue because it entered late and in a more limited way than peers, and because it has a more diversified business model. We expect the group to get hit harder.” (Tracer, 11/19)
Currently, UnitedHealth Group has about 550,000 customers through health insurance exchanges in 23 states. When the exchanges were launched in 2014, UnitedHealth Group offered products in only a few of the marketplaces, but grew the business considerably this year. (Snowbeck, 11/19)
“in recent weeks, growth expectations for individual exchange participation have tempered industry wide … so we are taking this proactive step,” UnitedHealth Chief Executive Stephen Hemsley said in a statement on Thursday. … Other large health insurers including Cigna, Humana, Aetna have said also said that the individual plans they offer could be affected in 2016. (11/19)
Shares of some high-profile takeover targets are trading at steep discounts to the prices of deals they signed, showing fissures may lurk in the current deal boom. … Cigna Corp.’s stock is 22% below the value of Anthem Inc.’s $48 billion offer, while oil-field-services provider Baker Hughes Inc. trades 17% cheaper than the price of its pending $35 billion sale to Halliburton Co. … Meanwhile, there have been signs that regulators take a dim view of some of the big pending deals. They are closely reviewing both Anthem’s deal for Cigna and the $34 billion proposed tie-up of Aetna Inc. and Humana Inc. Together, the two deals would trim the number of big health insurers from five to three. (Hoffman, 11/18)
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