Largest US insurer warns of exit from Obamacare

20 Nov 2015


UnitedHealth Group, the largest health insurer in the US warned yesterday that it might pull out of the Obamacare exchanges after 2016 – forcing millions of people to find other coverage – as low enrollment and high usage cost the company millions of dollars.

The possible move by UnitedHealth Group has raised fresh concerns over the viability of president Obama's signature health law and comes after the departure of over half of the non-profit insurance cooperatives this year.

In case United Health were to drop out, consumers would lose one of the lowest-cost plans available in much of the country, and commentators wonder how the void could be filled by smaller insurers.

Katherin Hempstead, head of the insurance coverage team at the Robert Wood Johnson Foundation said, ''If they can't make money on the exchanges, it seems it would be hard for anyone.''

UnitedHealth blamed the federal health care law for giving individuals too much flexibility to change plans, even as it downgraded its revenue forecast.

According to analysts, people who purchased insurance through the public exchanges were typically heavy users of their plans, draining insurers' profits.

According to commentators, while United's exit would especially hurt consumers in states where it held a large market share - including Nevada, Arizona, Texas, Missouri, Ohio and New York, if other big insurers were to follow suit, it could spell serious trouble ahead for Obamacare.

About 5.5 per cent of the roughly 10 million US citizens who had obtained their insurance coverage from marketplaces had bought United plans. This was a relatively small market share for the company, which offered plans in 34 states this enrollment season.

However, the company had been relatively slow to participate in the exchanges compared with other insurance giants including Anthem, the company that operated Blue Cross plans, which dominate the markets in many states. 

Other big insurers including Aetna, Anthem, Cigna and Humana would be in the public eye over the coming weeks.

The companies had seen their stocks fall dramatically after United Healthcare's announcement yesterday.

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