Barack Obama may be on his way out of the White House, but his political legacy is leaving a huge mess behind.
Insurance providers are realizing the hard way that you can’t get something for nothing. Sooner or later, providing costly services to a pool of unqualified candidates you wouldn’t have accepted otherwise is going to catch up with you. It happened during the sub-prime mortgage crisis, and history is repeating itself now in the health care industry.
Now, just a month after announcing they would expand ObamaCare coverage, UnitedHealth did a complete 180-degree turn and announced they are dropping state exchanges in 2016.
UnitedHealth, the nation’s biggest health insurer, will cut its participation in public health insurance exchanges to only a handful of states next year after expanding to nearly three dozen for this year. CEO Stephen Hemsley said Tuesday that the company expects losses from its exchange business to total more than $1 billion for this year and last. He added that the company cannot continue to broadly serve the market created by the Affordable Care Act’s coverage expansion due partly to the higher risk that comes with its customers.
… UnitedHealth has already decided to pull out of Arkansas, Georgia and Michigan in 2017, and Hemsley told analysts during a Tuesday morning conference call that his company will not carry financial exposure from the exchanges into 2017.
This is huge news… UnitedHealth is the largest insurance provider in the United States. If they cannot afford to support the costly high-risk exchanges, there is no way other companies can sustainably participate. In fact, smaller co-ops have already started closing their doors, according to the AP article:
A dozen nonprofit health insurance cooperatives created by the ACA to sell coverage on the exchanges have already folded, and the survivors all lost millions last year.
Before politicians in Washington try to hijack another major sector of the U.S. economy, they should ask themselves this: when has the government ever taken over a private industry and actually made it better?