The departure of UnitedHealth Group could be the death blow not even ObamaCare’s most stubborn and dishonest defenders can spin away.
Watching one state co-op after another keel over from fiscal heart attacks was enough handwriting on the wall, as UnitedHealth CEO Stephen Hemsley specifically mentioned the failure of co-ops as one of the major factors making his board nervous.
As
Forbes describes it, UnitedHealth basically dipped a toe in the ObamaCare waters but might be about to pull it back before they get frostbite:
UnitedHealth Group in a surprising announcement, said this morning it has revised its profit expectations for the rest of the year due to what it called a “deterioration” of its individual commercial insurance offerings on government-run exchanges under the Affordable Care Act and offered no commitment it would stay in the business beyond next year.
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.
UnitedHealth had been among the more cautious in offering coverage to individuals on the exchanges, entering only a handful of markets in 2014, the first year such coverage became available. The company expanded for this year and only recently said it would expand its offerings in nearly a dozen more states for 2016. But this morning, it said the business has deteriorated and it expects a reduction in earnings for the fourth quarter of this year of $425 million, or 26 cents per share “driven by 2015 and 2016 exchange product pressure.”
This is portrayed as a stunning reversal from what the company was saying just a month ago:
Just last month, UnitedHealth president and chief financial officer David Wichmann touted growth for the individual commercial business, saying “we continue to expect exchanges to develop and mature over time into a strong viable growth market for us.”
But UnitedHealth and other insurers need more Americans to come into the public exchanges because the patients that are signing up for coverage are sicker, making a “higher overall risk pool,” insurance executives say. It’s a key reason many Americans are seeing rate increases of 10 percent or more across the country on public exchanges.
That’s how the death spiral works: young healthy suckers who were supposed to get their pockets picked to fund this idiotic scheme are taking a pass, depriving the insurance companies of the easy money Obama promised them, and their bailout mechanisms have been disabled.
The
Washington Examiner notes that “several programs designed to mitigate risk for insurers through federal backstops go away” in 2017, essentially pulling the “training wheels” off the Affordable Care Act and leaving insurers to “thrive on their own.” Great – it’s a battered, rusty bicycle pedaled by a kid already covered in cuts and bruises, and the training wheels are coming off.
