The country’s largest healthcare company is getting out of the Obamacare business.
United Healthcare, which currently covers the most Americans in the US (pending the proposed Anthem-Cigna merger), said in its quarterly earnings release on Tuesday that it is removing its offerings from almost all Affordable Care Act exchanges by 2017.
“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,” said CEO Stephen Hemsley in the company’s quarterly earnings conference call.
“Next year we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017. We continue to remain an advocate for more stable and sustainable approaches to serving this market and those who rely on it for their care.”
The company had previously said that it was reviewing offering plans through the ACA exchanges, but this is confirmation that the company will remove nearly all of its products come 2017 to remove any financial impact.
The exchanges are state-by-state marketplaces that allow Americans to compare and sign up for now-mandated health-insurance coverage.
Hemsley said that the cost of offering coverage was too high, as those who gained insurance through the exchange were less healthy and thus the company paid out more claims.
“So as we look at it, the early indications on the health status of the members appears to be a little bit worse,” said UnitedHealthcare CFO Daniel Schumacher.
In total, the company expects to lose $650 million on people covered through the exchanges in 2016 after losing $475 million in 2015, according to Schumacher.
The company has also noted that younger people, who are healthier and on net pay into the system to help cover older, less healthy members are not signing up through the exchanges. This is hurting revenue and making it less attractive to the healthcare companies.
According to Hemsley, the company covers 795,000 people through the exchanges as of the end of the March 2016 and at the end if the year he expects to cover 650,000.