OBAMACARE TRAIN WRECK UPDATE

TRAIN WRECK UPDATE: Obamacare Insurers Are Suffering. That Won’t End Well.

This was part of a terrible, horrible, no good, very bad news cycle for Obamacare; as ProPublica journalist Charles Ornstein said on Twitter, “Not since 2013 have I seen such a disastrous stream of bad news headlines for Obamacare in one 24-hour stretch.” Stories included not just UnitedHealth’s dire warnings, but also updates in the ongoing saga of higher premiums, higher deductibles and smaller provider networks that have been coming out since open enrollment began.

It now looks pretty clear that insurers are having a very bad experience in these markets.

The sizeable premium increases would have been even higher if insurers had not stepped up the deductibles and clamped down on provider networks. The future of Obamacare now looks like more money for less generous coverage than its architects had hoped in the first few years.

But of course, that doesn’t mean insurers need to leave the market. Insurance is priced based on expectations; if you expect to pay out more, you just raise the price. After all, people are required to buy the stuff, on pain of a hefty penalty. How hard can it be to make money in this market?

What UnitedHealth’s action suggests is that the company is not sure it can make money in this market at any price.

It’s as if the whole thing is a scam designed to result in single-payer.

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UnitedHealthcare

One of the country’s largest health insurers warned Thursday that it may leave the ObamaCare exchanges within two years, delivering a shock announcement that could ripple through the marketplace.

At a shareholder meeting Thursday, UnitedHealthcare cast doubt on its ability to carry plans on the healthcare law’s exchanges beyond 2016, offering a more grim financial outlook than it had previously expected.

“In recent weeks, growth expectations for individual exchange participation have tempered industrywide," said Stephen Hemsley, the company's CEO. 

"Co-operatives 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,” he said.

The company's statement said it will be “evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.”

It also projected that its fourth-quarter revenue will be $425 million less than expected — amounting to 26 cents in earnings per share.

The company also announced it has “pulled back” on marketing plans for 2016.

Hemsley's mention of the ObamaCare co-operatives, or co-ops, refers to the half-dozen startup insurers that have collapsed in the past few weeks.

Opponents of the healthcare law have seized on the closure of the co-op insurers, which were intended to increase competition, and highlighted the troubles in hearings on Capitol Hill.

Fewer than half of the original 23 co-ops are still running, and only a handful are on solid financial footing.