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.
She might not have found it funny , but it is true.
By the way I did find it funny and in a way sad as it is true.
Did you actually think this was supposed to be successful? Read the post before this one.
Then the report about "solid growth" a month ago was a lie. You don't go from "solid growth" to "we may be pulling out of this mess..." in a month's time.
LOL! I think it’s funny!
Why on Earth would anyone think that as badly as Obamacare sucked, that a single payer system--a fully government-run system--would be better?
Obamacare is pouring gasoline over a burning house...a single-payer system would be the use of dynamite.
They’re just making noise so they can get more rate increases.... I have these guys as my health insurance on my individual plan (wife and I). We’re not in the Obamacare network.
Has anyone else noticed the change in Bo’s demeanor? I notice a change as even his coddling
press has begun to challenge him on his blatant disregard
of the muzzie danger. He has gone from arrogant smugness
to overt anger. Look at his eyes and hear his clipped voice.
He is more dangerous than ever. He reminds me of Hitler
when the war began to turn against him. How can this be
happening to ME?
I notice a change in King Hussien’s demeanor as even his coddling
press has begun to challenge him on his blatant disregard
of the muzzie danger. He has gone from arrogant smugness
to overt anger. Look at his eyes and hear his clipped voice.
He is more dangerous than ever. He reminds me of Hitler
when the war began to turn against him. How can this be
happening to ME?
In Europe, the post of Minister of Health is equal to Foreign Minister, and ten steps above Minister of Defense.
Isn’t United AARP? AARP can be credited with bringing us obamacare in the first place. Without AARP’s heavy expense and propaganda some of those Democrat Senators might not have voted for it. Why is AARP trying to get us Single Payer now? Is AARP in position to be the Single Provider?
I appreciate all the comments, but it’s over.
There’s nothing to do any more. What existed before Obamacare has been destroyed. It’s gone and it’s not coming back.
The insurance companies were set up by a scorpion who offered them a ride across the river. They’re about to drown.
There’s only one payer with the resources and the computational power to pay for “value based, evidence driven” medical care scored by electronic records and whose value in dollars is set nationally.
Forward!
Single Payer was the goal from the first. I think I remember even Mrs. Bill saying that way back when.
The medical profession does not resist and will nto resist the total socialization of medicine. The better ones react by retiring, if they already have their investments, or moving offshore as the best of the English and Canadian doctors did. The quality of practitioners in England has declined precipitously with the advent of Single Payer The induced shortage of doctors in this country will be made up by devolving doctors’ duties onto nurses and by reducing standards at medical schools as the brighter kids no longer go into medicine. The lesser doctors hire on to Hospitals and become not terribly highly paid employees and will more and more work their 40 hours and go home each day. Seeing more patients does not get these employees any more income but does raise their risk or lawsuit which still remains.
I found it revealing that the press forgot who they supported for a moment and were incredulous that Obama would leave the house unlocked after having been burgled the day before.
Trump single-payer will make sure corporations are okay, because sucking wealth for the favored few is what he thinks government is for.
That’s not ROI, that’s 13 cents per dollar on receivables. More like a bankruptcy settlement than a payment. In millennial math terms, it’s bad juju.
Not following you?
To hear HHS & other Obamacare supporters try to spin United's statement as 'no big deal' and insurance companies will rotate in and out of the market & this was only a small chunk of the market ... and on and on is laughable. This is a huge deal. Obamacare is terminally ill because its business insurance model does not work.
When will the denial, over the real shape Obamacare is in, end?
The Robert Wood Johnson Foundation and Urban Institute findings have now given additional credibility to the very same conclusion many of us have been trying to make since the Obamacare launch: The Obama administration has NOT been so successful in enrolling those eligible--they've got more than 60% of the group remaining!
If the Obama administration signs up the 10 million they are estimating they will sign-up during the current open enrollment, based upon the historic number that are subsidy eligible, they will have less than the 9 million of the 24 million RWJF and UI estimate are in the potential exchange subsidy market - just a 38% success rate. And, that is nowhere near where they will have to be to make these risk pools sustainable for the insurance companies or politically sustainable in the country.
Or keep the likes of UnitedHealth Group in the program.
Ok well let’s hear your ideas on exactly what nurses and medical professionals are supposed to do.
We are NOT like other professions. We can’t simply go on strike, for example. We just have to keep showing up for work or people don’t get taken care of.
I was once working for a hospice company that went out of business and left us nurses and cna’s high and dry, with no paycheck. Worst of all, they left their patients. Well we couldn’t just abandon them. So we kept seeing them as we were contacting their docs. Luckily another hospice company stepped in, took the pts, then hired all of us.
I was also was a pt last month. Had to have an ICD placed because of a diagnosis of A.R.V.D. I wouldn’t have wanted to be abandoned so some nurses and Dr’s could demand change by “taken it to the streets!”
So what should we do?
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