The country's largest health insurer, UnitedHealth, has announced its plan to exit most ObamaCare state exchanges where it currently operates by 2017.
The company expects losses from its exchange business to reach a total of $1 billion for 2015 and 2016 and has decided to pull back from the Affordable Care Act (ACA), simply known as ObamaCare.
UnitedHealth has previously announced that it will withdraw from Arkansas, Michigan and Georgia. It said it will pull out of ObamaCare exchanges in most of the states.
Since the Affordable Care Act has expanded, the health insurer can't continue to serve the increased demands of the market. Higher risks coming from customers and large financial losses in the future have prompted United Health to act immediately.
A recent study by the Blue Cross Shield Association (BCSA) has revelead that new enrollees of the ACA are sicker, more expensive and are higher-risk. They had higher rates of chronic diseases such as depression, hypertension, diabetes, coronary heart disease, hepatitis C and Human Immunodeficiency Virus (HIV) infection.
By 2016, the UnitedHealth Group expects about $650 million losses, up from its previous projection of $525 million. Last year, the company lost a total of $475 million.
David Wichmann, UnitedHealth's president and chief financial officer said that the firm has served about 795,000 people on public exchanges at the end of the first quarter. By December, the company expects about 650,000 enrolled customers.
The company's CEO, Stephen Hemsley, said that even if the company expanded to about three dozen state exchanges in 2016, it can't cope with the larger demand in the market.
"We continue to remain an advocate for more stable and sustainable approaches to serving this market," Hemsley said.
The Kraiser Family Foundation has provided estimates on recent trends in health insurance in the United States. This move by the UnitedHealth could mean higher insurance premiums in many states including Arizona, Iowa, Alabama, Nebraska and North Carolina.
Rivals of the company are merging with Aetna partnering with Humana, while Cigna joins forces with Anthem. This could mean that the industry will have only three big players in health insurance, down from five in the past.
Photo: Blake Patterson | Flickr