Posted on 11/20/2015 3:56:44 AM PST by Cincinatus' Wife
A threat by the nation's largest health insurer to pull out of ObamaCare is a sign of the industry's growing angst about the viability of the federal exchanges, sources close to the industry say.
UnitedHealthcare's warning sent new shockwaves across the healthcare sector after weeks of mounting anxiety among private insurers whose participation in the exchanges is critical to the viability of the president's signature law.
In the last month alone, insurers have learned that the Obama administration has significantly lowered its expectations for new customers and will have far fewer federal dollars to help cushion insurer losses.
"We've been very clear with the Administration about the serious challenges facing consumers and health plans in this exchange market," Marilyn Tavenner, the CEO of the powerful insurer group America's Health Insurer Plans, wrote in a statement. Leading insurers have already given strong warnings that the Obama administration needs to step up its funding commitment for companies that are still struggling with less-healthy - and therefore more expensive - customers. Some believe that Thursday's announcement by UnitedHealth could be an attempt to pressure the administration into action.
"All of the challenges they cited are real challenges and all insurers across the board are feeling as well," one source within the insurer industry said.
Experts say it's the clearest sign yet that ObamaCare exchanges remain weaker than expected after two years. It's also the latest warning from an industry that has been deeply dissatisfied by the Obama administration's rollout of the law since the beginning.
"I think [UnitedHealth] is legitimately thinking that things are - the risk pool itself - is worse than we thought. We're beginning to hear that a bit more," said Joseph Marinucci, a senior analyst with Standard and Poor. "There are still some open questions here. They still lack a measure of maturity."
The warning feels abrupt, coming less than a month after UnitedHealthCare projected solid growth in its ObamaCare plans. But it's also the culmination of a month of bad news for the healthcare law.
In a call with shareholders Thursday, UnitedHealthCare CEO Stephen Hemsley said the company was lowering its profit expectations by several hundred million dollars as a result of the grim outlook of ObamaCare plans. He said the company was taking a "proactive step" to halt the company's marketing of ObamaCare plans next year, and would evaluate whether to participate at all in 2017.
"As we see those markets actually being sustainable, we would be open to participating in them," Hemsley told investors, stressing that the company did not want to continue losing money. "We cannot sustain those kinds of costs and losses, and we will evaluate the marketplace as it goes."
The announcement - less than three weeks into this year's open enrollment - sent shockwaves across the marketplace. Within hours, stocks for major providers and hospital groups nosedived and multiple industry analysts began predicting a domino effect among other insurers.
"I think everyone is looking at this, like, 'Ok, here's a big guy pulling out. If anything they could have sustained these challenges and these losses, and they're not going to do it," the industry source said.
"Throughout the next year, companies will be looking to reposition. There will be shakeout, no question," Marinucci, the S&P analyst, added.
Hemsley's remarks are a reversal from the company's expectations given with shareholders just last month. But during that time, federal health officials announced a major blow to an ObamaCare program known as "risk corridors," which was designed to serve as a cushion for insurers facing larger-than-expected costs.
Insurers' demand for that pool of money has far exceeded the available funds, in large part because companies have contributed less to the program.
As a result, the Obama administration can pay out just 13 cents of each dollar that it owes insurers - threatening every insurer with plans on the marketplace, but particularly those with smaller reserves.
Congress has the power to address that shortfall, but GOP leaders have expressed no interest in authorizing more funding.
When making its projections on Thursday, UnitedHealth specifically cited the lack of federal funding available in the risk corridors program - the same problem that has contributed to the collapse of 11 startup state insurers known as "co-ops" in the last several months.
UnitedHealth also pointed to the tempered enrollment expectations from the Obama administration. Officials are hoping to sign up only 900,000 new customers this season, reaching a total of 10 million by next year.
The Obama administration has pushed back against the sharply worded statements from UnitedHealth.
"Today's statement by one issuer is not indicative of the Marketplace's strength and viability," spokesman Ben Wakana said in a statement.
Others within the healthcare sector shared the administration's view, chocking up the warning as a natural symptom the industry's adjustment to the sweeping law.
"American health care is undergoing significant change and evolution, and the health exchanges are part of that disruption," said Bernard J Tyson, Chairman and CEO of Kaiser Permanente, a non-profit. "While there have been challenges at times, we believe at the end of the day they are causing healthy disruption, and are forcing the health care industry to respond better to consumer needs."
Tim Jost, a professor of healthcare law and longtime ObamaCare supporter, added that UnitedHealth, in particular, has been cautious about the exchanges all along.
"I don't think it's a disaster," he said, noting that the insurer largely stayed out of the market in the first year and has come out of the exchanges in several states last year.
He pointed out that only a "very small chunk" of UnitedHealth's customers are on the exchanges - about 1 million of 50 million. He added that some movement of insurers is expected in the early years of a marketplace restructuring.
While other insurers have pulled out of ObamaCare plans because of financing concerns, UnitedHealth would be by far the largest.
"They come and they go. There's probably more going than coming, but it's not the end of the game yet," he said.
Hey insurers, welcome to the world of the productive taxpayer, whose return is about 1 penny on the dollar while his neighbor on ‘disability’ plays golf and mows his lawn.
death spiral.
Universal healthcare - single payer - government “health”care coming over the horizon?
At the hardware store there are fine thread screws and coarse thread screws. Obamacare is a coarse screw.
Barack Obama: If you want to keep your healthcare, your doctor, you can.
Obama on refugee refusal: “[Republicans have] been playing on fear in order to try to score political points or to advance their campaigns. And it’s irresponsible. And it’s contrary to who we are. And it needs to stop, because the world is watching.”
Mr President AMERICANS ARE WATCHING!!!!!!!!!!!
Sec of State John Kerry: “It’s inappropriate for Americans to panic.”
‘You may not be interested in war, but war is interested in you.’ - supposedly said by Trotsky but disputed he said it all.
Still, the doctors, nurses and other medical practitioners who entered the field for whatever reason can and must become the primary resistors of Obama’s USNHS pipe dream.
Every nation that has socialized medicine declared its intentions openly and the medical types knew what they were getting into. Obama, of course, is too cowardly and devious for such declarations and has instead lied about it all.
The medical professionals never signed up to become bureaucrats but they are now punching in more data than a DMV clerk.
When medicine is politicized, then politics will be about medicine, since we all will need it sooner or later. Politicians know nothing about the subject except it costs money therefore rationing and the usual budget games will be dominated by rhetoric about dialysis machines etc.
Also politically, the Dems dream of a new militant public-sector union comprised of high earners with advanced degrees who will make contributions (read: bribes) and become life-and-death ideological shock troops.
If Sally Scrubs the neonatal nurse doesn’t want to become a government stooge then she had better wise up, put her dry-erase marker down and do something about it.
13 cents on the dollar? That’s an ROI any business can live with. After all, healthcare should be free right?
Honestly it isn’t bad. Makes me wonder what the average is.
You said...
“Universal healthcare - single payer - government “healthâ€care coming over the horizon?”
No
Got a neighbor here doing that.
She does not work. He works cash. Both claim disability, food stamps, and free breakfast, lunch for their kid.
They moved from NY state 3 years ago to rent a fixer upper house and the first thing was to call the cops on neighbors claiming he and she were racially harassed because she is white and he is black, and they live here in the south in a all white neighborhood, in one of the whitest counties in FL.
They had the only Obama sign in the neighborhood and used to taunt people who would drive by the house by pointing to it and laughing.
Everyone knows they are scum, but they don’t care as long as we all go to work and pay for their Florida living.
Absolutely...but ROI of -0.87 on every dollar tends to make shareholders somewhat cranky.
Yep. My corp has already said they’re going to be looking at public exchanges next year, assuming there are any. That’s after $100/month increases this year.
OK, now I understand. When Obamacare goes under, it will all be the Republicans fault.
Only Democrats are stupid enough to think that a government with over $100 TRILLION in liabilities that will end in the nation’s bankruptcy would be competent enough to run the nation’s health care. If our education system taught students how an economy works, it would cut down on Democrat voters.
I once met a girl who was a fraud investigator for state welfare/disability. I told her she was about as effective as a fireman with a blowtorch. Of course she didn’t think that clever or amusing.
Potentially, or a ‘two-tiered’ system like those that have developed in most socialist nations. Those who can afford it will pay for higher-level care, those who can't will have the waiting periods and restriction of care that is common in those socialist nations. It will provide less care for the underprivileged than they have been getting in our previous private insurance system.
As far as 0.13 cents on the dollar, this is what physicians and hospitals are used to getting from medicare/medicaid.
For the left, that may be the only upside to a GOP president post Obama.
You just know ‘The ACA Funding Crisis’ will become a media trope they will toss in the lap of every Republican foolish enough to appear on camera.
six month wait for MRI like in England?
great idea giving everyone access to healthcare for free, even AFTER the fact if they get sick.
i’ve never heard such insanity
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.