Per the article, UHC is not a major player on the ACA exchanges, but they are one of the 4 big national health insurers (the others being Cigna, Aetna, and the Blues). So it’s not like this is some two-bit insurer which doesn’t know what they’re doing.
It goes without saying that this does not mean that the roof is falling in and that the exchanges will fail. But it’s an ominous sign.
As I’ve noted in other threads, there are risk-sharing measures in place for the first few years of the exchanges, and there is a school of thought which believes that once these are removed, the roof will indeed fall in. I would guess this possibility is a factor in UHC’s thinking.
And this could snowball. Because one thing that keeps rates lower than they otherwise would be in new markets is companies buying market share at the expense of current profits, thinking that they’ll recoup their money down the road when things stabilize. But if companies start thinking this is going to be a tough market at best, they’ll be reluctant to take an upfront hit in order to get their feet in this particular door.
It’s an insurance company. It’s not like they get a lot of love to begin with. But as the OP notes, there’s only 3 other big players in the health insurance industry these days. If the rest follow suit, then the public exchanges will be left to a bunch of small-time companies with low-quality service (offering some combination of really high rates, really crappy coverage, and a tendency to go broke and leave their customers in the lurch).
Actually, haven’t several of the exchanges already gone broke? Maybe UnitedHealth just sees the cliff approaching.
It’s not as simple as that, though. These are the 4 national carriers, but there are other carriers which are pretty big locally, e.g. Kaiser in CA or Harvard Pilgrim in NE.
That said, it seems that a lot of the rates in the exchange plans are supported by either “skinny networks” (which are becoming something of an issue) or underpricing. These might not last.
From a tactical position please let them pull out. From a political standpoint the idea of the ACA using private insurers was a sop to get the damn thing passed. If the majors pull out maybe we can transition to a proper single-payer plan and the large carriers can begin phasing out health insurance from their books. There’s more money in Life/Accident/Home, anyway.
Even with that “sop”, the only way it got passed was because the Democrats controlled the presidency, the House, and had 60 votes in the Senate. That’s a pretty rare circumstance, and they’re certainly far from it now.
[Actually you could make the opposite argument - that this is the ideal scenario for ACA opponents. If it got struck down by court ruling it would produce enormous disruption, such that a political response of some sort would be called for. If it slowly crumbles it might just die. Though of course, the ACA is a lot more than just the exchanges.]
How much political will exists for single payer? You think that a forced single payer would survive court scrutiny? There’s a greater chance for Obamacare to just crumble over the next decade than for the US to have single payer.
I think that an expansion of Medicaid or Medicare can pass, depending on the funding levels necessary, but everyone’s going to demand to keep what they have.
As for United Health, everyone knows I’m very pessimistic about ACA, but I don’t see this as particularly dangerous news. The exchange business model will work for some insurers, for others it won’t. An insurer has to recognize what kind of pool they are insuring and set rates appropriately. United Health was one of the companies that was probably setting rates too low.
As provider we see the other majors working on developing systems that incentivize cost effective care, as the ACA was designed to incentivize; United not so much so. No question if you do not try you do not succeed.
Then there is this play that they are making … Harken Health.
Harken is an “independent” subsidary of United that gives every appearence of being specifically designed to cherry pick young White not poor (very likely healthier) members.
Yes, while United is making noise about getting out of the market that they never really entered or committed to, they have created a subsidary that allows them to cover only the lowest utilizers.
The trick is to make a product that is attractive but accessible only to those who are unlikely to cost you much. Others had tried similar things with Medicare HMO products … having a product with attractive rates and networks with sign up in a building that required walking up two flights of stairs. (no cite for that, so leave it “as the story goes.”) Harken’s giimmick is that you can only access the otherwise overall attractive product using their staff model primary care providers who just happen to only be located in neighborhoods that are mostly populated with young White adults making significantly above a living wage. The article is wrong in that this is not an integrated model at all. It is brazen cherry picking.
What kind of rep do they have in the industry? Relative to others, how are they considered as to profit and service? In those scandals about insurance companies pulling legal shenanigans to screw people out of their coverage when they needed it most…how did they “stack up”?
Maybe not quite the perspective you are looking for 'luci but from my side of the fence they are not thought of well.
That last bit is most on point for this thread. Those new initiatives are the essential ingredient of making products that can cut it in the exchange environment. If a payor is not partnering to develop them then they are not really playing in that game, they just want business as usual.
In my region at least their reputation for customer service is not great. Below Humana even.
Interesting bit to compare and contrast … in the Chicago area University of Chicago Hospitals has been the main academic center anchored in the South side surrounded by poverty. For decades the have been struggling as a result and often trying to dodge the responsibility of care to the populations that surround them. They dropped out of being an adult trauma center for years as they stated they were losing too much money on taking care of adult gunshot victims. Now they are, in a partnership with Sinai Health system, setting up a new adult trauma center at a hospital near Chicago’s epicenter of gun violence. And merging with Ingall’s Hospital in south suburban Harvey, a town whose median household income is $31K and a hospital whose admissions are mostly Medicare and Medicaid. The only conclusion I can come to is that they have decided that the ACA has made actually caring for the poorer (if not the poorest) fiscally feasible (as part of a plan that also includes working collaboratively with more solidly middle class suburban hospitals and physician groups).
Interesting times. Not all perfect to be sure but no roof falling in. One insurer who was really not at all committed to competing in the space not doing well in it, albeit simultaneously trying to do a scummy end run into it for only the healthiest subpopulation. Not so ominous a sign.
Precisely the perspective, actually. Kinda probing in the direction of asking why they need to make so much money that they can’t “compete”? Because of the burden of their investor’s expectations? What sticks out in my memory is reading how upset some of them were about a rule that means they have to pay out at least 80% of their premiums as benefits. A twenty percent margin is a problem?
I’m wondering if its a ploy. If they got really lucky, maybe they start a panic, Obamacare collapses and they go back to the good old days. Or, more likely, set up for negotiations, see if they can’t get the rules tweaked a bit so that more cashflow stops with them.
Seems to me, if dire straits were the usual thing with health insurance, and none of them were capable of coping with the situation, then they would have all joined the chorus as soon as one of the big boys broke the ice. Which makes me think that some of them have counted their beans, and figure that if they are smart, they can make a modest but secure profit pretty much guaranteed. Maybe if you don’t need your own building with a marble plaza and huge crappy modern sculpture. Maybe your CEO is frugal and modest, and can squeek by on ten times what the President makes.
Of course, just because you are not actively bitching doesn’t mean you’re happy. But I’m wondering if they’ve simply looked it over from a leaner perspective and figured, yeah, this can work.