UnitedHealth may exit ACA exchanges due to losses: 7 things to know

UnitedHealth Group, one of the nation's largest health insurers, significantly lowered its profit estimates for 2015 on Thursday morning. The health insurer blamed an expected loss on selling individual policies under the Affordable Care Act for the lower profit estimate and said it is now weighing whether it will continue to offer individual coverage through the online ACA exchanges for 2017.

Here are seven things to know about UnitedHealth's potential departure from the ACA exchanges.  

1. UnitedHealth said it cut its profit forecast to account for $425 million in losses it is expecting on individual policies sold on the ACA exchanges in 2015 and 2016. The health insurer expects 2015 earnings of about $6 a share, down from its previous estimate of $6.25 to $6.35 per share.

2. In light of the losses, UnitedHealth is considering whether to stop offering plans on the exchanges. The health insurer said it would make a decision by the middle of 2016 whether it would exit the exchanges for 2017. "We cannot sustain those kinds of costs and losses, and we will evaluate the marketplace as it goes," said UnitedHealth CEO Stephen J. Hemsley in a statement, according to The New York Times.

3. To minimize the increase of individual customers purchasing UnitedHealth plans on the exchanges, the health insurer said it has already started scaling back its marketing efforts for 2016.

4. UnitedHealth emphasized that the rest of its insurance business outside of the ACA exchanges remains strong.

5. If UnitedHealth does exit the ACA exchanges it would not have a significant effect on the marketplace or consumers, according to Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. "United doesn't matter that much to this market right now," he told The New York Times. "They came late to the party, and their enrollment is still relatively modest."

6. At the end of the third quarter of fiscal year 2015, about 550,000 UnitedHealth members were enrolled in an exchange plan, representing a small percentage of the 46 million members who comprise UnitedHealth's entire insurance segment, according to The Wall Street Journal.

7. Bill Melville, senior analyst for Decision Resources Group, said other insurers are seeing the same challenges as UnitedHealth. "All insurers in the exchanges are facing similarly rough headwinds — too many older, sicker enrollees and not enough young 'invincibles,' many of whom are still on their parents' policies or now qualify for Medicaid," he said in a statement. Regarding UnitedHealth possibly dropping out of the ACA exchanges, Mr. Melville said "this would be a blow to multiple exchange markets, but not a death knell."

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