Insurance Companies Ditching Obamacare Follow A Similar Pattern
Major insurance providers are opting out of the Obamacare marketplace and profiting as a result.
Three of the most prominent insurers on the Obamacare exchanges are either ditching Obamacare entirely or are significantly scaling back their involvement in 2018. The resulting profits do not bode well for the future of former President Barack Obamas landmark legislative achievement. The system is causing providers to hemorrhage money and is crushing consumers with backbreaking premium increases.
UnitedHealth was the first health insurance company to expose the most significant problem with the legislation offering plans on Obamacare exchanges is a money-losing, profit sucking proposition.
In April 2016, the company announced a 765,000 reduction in the number of Obamacare exchange policies it planned to offer in 2017, citing massive profit losses of $475 million in 2015 and expected losses over $600 million for 2016.
The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis, UnitedHealth Chief Executive Officer Stephen Hemsley told reporters in April 2016. Next year, we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017.
The company reduced its exposure on the exchanges significantly, cutting its participation from 34 states in 2016 to just three in 2017 Virginia, Nevada and New York. It plans to drop Obamacare plans in Virginia in 2018.
UnitedHealths decision to largely remove itself from Obamacare is proving lucrative, propelling the company towards double-digit percentage profit growth in the first-quarter of 2017. First-quarter 2017 earnings from operations and revenues were up 15 and 11.8 percent respectively from the first-quarter of 2016 the same quarter the company announced its massive reduction in Obamacare plans.
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