# UnitedHealth warns it may exit Obamacare plans **URL:** \ **Category:** Great Debates\ **Created:** [November 19, 2015, 8:37pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013 "2015-11-19T20:37:59Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [November 19, 2015, 8:37pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/1 "2015-11-19T20:37:59Z")
[UnitedHealth warns it may exit Obamacare plans](http://www.usatoday.com/story/money/2015/11/19/unitedhealth-group-earnings-downgrade-obamacare-affordable-care-act/76040322/) > [@](#): > > The nation’s largest health insurance provider, UnitedHealth Group, dealt a blow to the Affordable Care Act on Thursday when it warned it may stop offering coverage to individuals through public exchanges after taking a big hit to the bottom line from disappointing enrollment and the law’s unexpected effects. > [@](#): > > People who purchase insurance through the public exchanges are typically heavy users of their plans, draining insurers’ profits, analysts say. > > In a sharp reversal of its previously optimistic projections, UnitedHealth suspended marketing of its Obamacare exchange plans for 2016 — which the company has already committed to offer — to limit its exposure to additional losses. > > “We see no data pointing to improvement" in the financial performance of public-exchange plans, UnitedHealth CEO Stephen Hemsley said on a conference call, though he added that “we remain hopeful” the market will recover. > > The move comes amid indications that insurers are absorbing steeper costs than they expected from plans offered to individuals through the public exchanges, which are purchased online. > [@](#): > > Even though UnitedHealth wasn’t a major player yet on the ACA exchanges, the fact that it priced plans conservatively and entered cautiously made its statements more significant, said Katherine Hempstead, who heads the insurance coverage team at the Robert Wood Johnson Foundation. > > “If they can’t make money on the exchanges, it seems it would be hard for anyone,” Hempstead said. > [@](#): > > While UnitedHealth’s statement is significant, Kaiser Family Foundation Senior Vice President Larry Levitt said it “matters more for what it says about what industry as a whole thinks about Obamacare.” > > “If they exited (the exchanges), it wouldn’t matter that much to the functioning of the ACA, but it would show why increasing enrollment is so important,” Levitt said. “This market is not yet profitable for insurers, but it could become profitable if enrollment grows.” 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. But again, the jury is still out. Time will tell. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [November 19, 2015, 9:02pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/2 "2015-11-19T21:02:49Z")
If they overplay their hand, they’ll alienate a lot of voters. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [November 19, 2015, 9:43pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/3 "2015-11-19T21:43:24Z")
> [@Trinopus](#): > > If they overplay their hand, they’ll alienate a lot of voters. 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. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [November 19, 2015, 10:27pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/4 "2015-11-19T22:27:03Z")
> [@Diceman](#): > > 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). 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. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [November 19, 2015, 10:42pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/5 "2015-11-19T22:42:33Z")
Why didn’t they bail out of Medicare decades and decades ago? This sounds like more anti-Obamacare hogwash from Fox News, rather than any kind of meaningful economic commentary. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [November 19, 2015, 11:08pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/6 "2015-11-19T23:08:55Z")
> [@Trinopus](#): > > Why didn’t they bail out of Medicare decades and decades ago? > > This sounds like more anti-Obamacare hogwash from Fox News, rather than any kind of meaningful economic commentary. Does Medicare pay insurance companies? Or does it pay health care providers? ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [November 19, 2015, 11:18pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/7 "2015-11-19T23:18:06Z")
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. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [November 19, 2015, 11:25pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/8 "2015-11-19T23:25:20Z")
> [@Jonathan\_Chance](#): > > 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. 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.] ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [November 19, 2015, 11:31pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/9 "2015-11-19T23:31:23Z")
> [@Jonathan\_Chance](#): > > 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. 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. ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [November 19, 2015, 11:55pm UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/10 "2015-11-19T23:55:18Z")
> [@Fotheringay-Phipps](#): > > > [@](#): > > > > “If they exited (the exchanges), it wouldn’t matter that much to the functioning of the ACA, but it would show why increasing enrollment is so important,” Levitt said. “This market is not yet profitable for insurers, but it could become profitable if enrollment grows.” I love it. _‘You wonder how we make a profit if we lose money on every transaction. Simple, volume!’_ - [First Citywide Change Bank](https://screen.yahoo.com/first-citywide-change-bank-2-000000534.html?query=First%20citywide%20change%20bank) (SNL) > [@Trinopus](#): > > If they overplay their hand, they’ll alienate a lot of voters. Which voters are those and which hand is being overplayed? UnitedHealth is saying that it may not be worthwhile to participate in the exchanges. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [November 20, 2015, 12:09am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/11 "2015-11-20T00:09:27Z")
> [@octopus](#): > > 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. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [November 20, 2015, 1:22am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/12 "2015-11-20T01:22:11Z")
United is disingenuous. 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](http://my.chicagotribune.com/#section/-1/article/p2p-84732493/). 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. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [November 20, 2015, 2:57am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/13 "2015-11-20T02:57:25Z")
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”? ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [November 20, 2015, 4:10am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/14 "2015-11-20T04:10:48Z")
> [@octopus](#): > > . . . You think that a forced single payer would survive court scrutiny? . . . Like Medicare and the Veterans Administration? The courts have certainly been eager to break up those monopolies, haven’t they? ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [November 20, 2015, 4:15am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/15 "2015-11-20T04:15:41Z")
Maybe not quite the perspective you are looking for 'luci but from my side of the fence they are [not thought of well.](http://www.beckershospitalreview.com/finance/the-worst-payers-of-2014-7-observations-from-hospital-leaders.html) > [@](#): > > About 42 percent of hospital leaders said UnitedHealthcare was the worst at dealing with hospitals. … Most trustworthy payers …UnitedHealthcare scored the worst in this category as well. … UnitedHealthcare was ranked as the worst for paying hospital claims promptly … In terms of the worst reputation for honesty in contract negotiations, UnitedHealthcare again took the prize … New initiatives. Commercial payers have started to partner more with hospitals on new initiatives, like accountable care organizations and patient-centered medical homes. About 37 percent of hospital executives said Blue Cross Blue Shield was the best for these projects. UnitedHealthcare ranked as the worst. … 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](http://www.jdpower.com/ratings/study/Member-Health-Plan-Study-by-Region/457ENG/Illinois-Indiana/1158). 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. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [November 20, 2015, 4:49am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/16 "2015-11-20T04:49:08Z")
> [@Trinopus](#): > > Like Medicare and the Veterans Administration? The courts have certainly been eager to break up those monopolies, haven’t they? Since private health care still exists I’m not seeing the monopoly or the single payer. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [November 20, 2015, 5:55am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/17 "2015-11-20T05:55:06Z")
Looked for how we physician groups rate them and found [this](http://www.medscape.com/viewarticle/776213): > [@](#): > > For the fourth year in a row, Medicare Part B has received the highest overall satisfaction score from group practice professionals and UnitedHealthcare has received the lowest score, according to the latest survey on third-party payers conducted by the Medical Group Management Association (MGMA). … The MGMA survey is not the only one in which UnitedHealthcare has received poor grades from physician practices. When Medscape asked physicians last year what payer they considered the worst, the biggest vote-getter — at 14% — was UnitedHealthcare. It also topped the list for the highest frequency of claims denial. And yes they have had more than their share of [legal issues](https://en.wikipedia.org/wiki/UnitedHealth_Group#Legal_issues). ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [November 20, 2015, 5:57am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/18 "2015-11-20T05:57:24Z")
> [@octopus](#): > > Since private health care still exists I’m not seeing the monopoly or the single payer. Exactly. You can do single payer on top of the existing system but you can’t REPLACE private health insurance with single payer. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [November 20, 2015, 6:26am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/19 "2015-11-20T06:26:15Z")
> [@DSeid](#): > > Maybe not quite the perspective you are looking for 'luci but from my side of the fence… 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. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [November 20, 2015, 6:37am UTC](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013/20 "2015-11-20T06:37:15Z")
> [@adaher](#): > > Exactly. You can do single payer on top of the existing system but you can’t REPLACE private health insurance with single payer. Why not? Governments are immune from anti-trust rules. (You don’t see any competition to form private armies to reduce Pentagon costs.) The argument that a single-payer system would be dismantled by the courts is contrary to reality, as the V.A. demonstrates. [Next page](https://boards.straightdope.com/t/unitedhealth-warns-it-may-exit-obamacare-plans/738013.md?page=2)