As UnitedHealth Group toys with the idea of abandoning the Affordable Care Act's insurance exchanges, investors and other stakeholders are waiting to learn the full extent of the damage to the exchanges. UnitedHealth, the nation's largest health insurer, will report fourth-quarter and full-year 2015 financials Tuesday, kicking off the earnings season for a healthcare industry that was bruised in the last weeks of the year.
The Minnetonka, Minn.-based healthcare conglomerate estimated in November that losses from marketplace plans would total $425 million in its 2015 reporting period. The loss included a premium deficiency reserve of $275 million that's expected on its 2016 ACA policies.
The CMS has reported growth in the exchanges—11.3 million people had signed up on the state and federal marketplaces as of Dec. 26, above the Obama administration's modest goal of 10 million for 2016. But many analysts and observers don't believe the exchanges' risk pools have improved enough to satisfy insurers.
“Dysfunction in public exchanges will continue to reduce earnings, create volatility and serve as a general distraction for the companies and investors,” Barclays Capital analyst Josh Raskin wrote in a research note.
The CMS may alleviate one marketplace concern of UnitedHealth and other insurers by changing the rules around special-enrollment periods. Insurers have argued that a large portion of their losses have come from high utilizers who enroll in coverage outside of open enrollment but can't prove they qualify for hardship exemptions. UnitedHealth and others have cut commissions to brokers who sell plans outside of open enrollment.