UnitedHealthcare, the biggest health insurer in the country, could pull out of the Affordable Care Act because it is proving too expensive for the company.
The Minnetonka-based company on Thursday said its participation in President Barack Obama's landmark health act is putting pressure on its budgets, forcing it to revise down its earning forecast by $425 million.
United is now saying it has pulled back on its marketing efforts for products it sells on health insurance exchanges, and said it "will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017."
"In recent weeks, growth expectations for individual exchange participation have tempered industrywide, cooperatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step," UnitedHealth Group CEO Stephen J. Hemsley said.
Bloomberg reports it marks an "abrupt shift" from last month, when UnitedHealth announced its intention to bring its products to 11 new health insurance exchange markets next year.
While acknowledging UnitedHealth was slower than some rivals to sell Affordable Care Act policies since the exchanges opened, Bloomberg was told its withdrawal would be a "significant blow" to the program, and "may indicate that other insurers are struggling."
The Wall Street Journal reports UnitedHealth currently has enrolled 550,000 Affordable Care Act customers, and had indicated in its October update it was expecting "strikingly better" performance in 2016 due to the increase in premiums people would have to pay.
The newspaper notes several other big insurance companies had been reporting problems with their ACA business in their latest earnings update, with Anthem saying it had enrolled fewer than expect – albeit while making a profit – while Aetna said it expects to lose money on its exchange business this year, but it does hope to turn a profit next year.
In its statement, UnitedHealth said it "remains a strong supporter of sustainable efforts to ensure access to affordable, quality care for all Americans." The company added that performance of its non-exchange products remains "in line with expectations."