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UnitedHealth Says It Should Have Stayed Out of Obamacare Longer
The largest U.S. health insurer should have stayed out of Obamacare’s new individual markets longer, according to its chief executive officer. UnitedHealth Group Inc. says it will take hundreds of millions of dollars in losses related to the business.
UnitedHealth said on November 19 that it may quit selling coverage in the Affordable Care Act’s individual markets in 2017, Bloomberg reports. The markets are a key mechanism in the law’s goal to cover about 10 million Americans next year, and UnitedHealth expanded its offerings for next year after initially holding off when the markets started covering people in 2014.
“It was for us a bad decision,” UnitedHealth CEO Stephen Hemsley said at an investor meeting in New York. “I take accountability for sitting out the exchange market in year 1 so we could in theory observe, learn, and see how the market experience would develop. This was a prudent going-in position. In retrospect, we should have stayed out longer.”
Losses from the plans this year and next will total more than half a billion dollars, the company has said. UnitedHealth said last month that it was scaling back efforts to market coverage to millions of people shopping for insurance on the Affordable Care Act’s new marketplaces. Other insurers, including competitors Anthem Inc. and Aetna Inc., have also either suffered losses in the Obamacare markets or said they haven’t seen the margins they expected. Next year will be the law’s third of providing coverage.
“It will take more than a season or two for this market to develop,” Hemsley said. “We did not believe it would form this slowly, be this porous, or become this severe.”
Source: Bloomberg, December 1, 2015.