Affordable Care Act encounters new headwinds

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NEW YORK — UnitedHealth Group Inc. may pull out of Affordable Care Act health insurance exchanges in 2017 after losing what it said were hundreds of millions of dollars on policies sold under the law.

The company, the nation’s largest health insurer, significantly cut its 2015 profit estimates based on losses on individual policies sold through the Health Insurance Marketplace.

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Over 1 million people chose plans via HealthCare.gov in the first two weeks of the current enrollment period.

“Growth expectations for individual exchange participation have tempered industrywide, cooperatives 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 Hemsley, UnitedHealth’s chief executive officer. The company also has reined in its marketing for individual exchange products in 2016.

The announcement is the latest sign that business from the ACA has been unprofitable for many insurers, notwithstanding a flood of new customers who have boosted revenues.

The industry’s troubles, including significant premium increases in many parts of the country, along with the expected shutdowns of many of the ACA’s nonprofit cooperative insurers, are pressuring the Obama administration to revise elements of the statute.

The concerns also mean the law may again become a contentious political issue. Just last week, the Senate passed a bill repealing the law. With the House having approved a similar version, the legislation will reach President Obama, where it faces certain veto.

“Premiums are up and, ultimately, health care is more expensive,” Rep. Jason Chaffetz (R., Utah), was quoted as saying in the Wall Street Journal. “The consequences we see from this hastily and poorly conceived legislation were entirely foreseeable and not at all ­surprising.”

Rep. Xavier Becerra (D., Calif.), said the ACA had created a growing, “maturing market.”

Hemsley said UnitedHealth is unwilling to continue its losses into 2017. The company has already locked in its exchange policies for next year. It will make market-by-market determinations in the first half of 2016 on whether it will keep selling policies through the ­exchanges. “We can’t sustain these losses,” Hemsley said. “We can’t subsidize a market that doesn’t appear at this point to be sustaining itself.”

While the 550,000 people with UnitedHealth plans purchased through the marketplaces make up a relatively small group, the action of one mega-insurer could ripple in an increasingly consolidated sector. It could also heighten scrutiny of proposed mergers between Anthem and Cigna, and Aetna and Humana.

Anthem president and CEO Joseph Swedish said, however, “As a leader during this time of unprecedented transformation in health care, Anthem remains committed to enhancing access to high-quality, affordable health care for all of our members inside and outside of the insurance exchanges and continuing our dialogue with policy makers and regulators regarding how we can improve the stability of the individual market.”

Aetna said it expects to break even on exchange plans by combining higher prices and better management of medical expenses.

Aside from UnitedHealth, insurers “remain committed to their current marketplace participation,” a Health and Human Services department spokesman said in response to an email. “This is further indication that statements from one issuer are not reflective of the marketplace’s overall strength going forward. The future of the marketplace is strong. It continues to grow, giving more Americans access to quality, affordable health care, and consumers are benefiting from increased choice and ­competition.”

Over 1 million people selected plans through HealthCare.gov in the first two weeks of the current enrollment period, he added. “We expect that during open enrollment, millions more will continue to shop for quality coverage that fits their needs and budget. More Americans are getting covered, and we’re confident this positive trend will continue.”

The enrollment period may have a direct bearing on 2017, which is when government programs that effectively recompense insurers for taking on more costly customers will expire. The critical factor may be how the current sign-up period goes.

At least one industry observer downplayed UnitedHealth’s move. “United doesn’t matter that much to this market right now,” Larry Levitt, an executive with the Kaiser Family Foundation, told The New York Times. “They came late to the party, and their enrollment is still relatively modest.”


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