United Healthcare May Say “No” to the Affordable Care Act

Stephen Hemsley, CEO of United Healthcare, America’s largest insurance company, has just announced that United will be scaling back the number of plans it offers on the Marketplace in 2016.

Hemsley has stated publically that United is facing significant losses, and that the company erred in expanding from four Marketplace plans to approximately a dozen between 2014 and 2015. While United will remain on the Marketplace next year, they have not yet decided whether they will continue to participate in 2017, prompting concerns that other insurance companies will follow their lead.

Hemsley claims that if United exits the Marketplace in 2017, such a decision would be temporary.

Health insurance companies like United are struggling thanks to a policy rider introduced into a 2014 budget bill. Proposed by Senator Marco Rubio, the rider limits the accounts that the Department of Health and Human Services can access for their risk corridor program, aimed at providing relief to insurance companies who’ve accepted particularly low-income or sick subscribers.

These insurers found that the Obama administration has been unable to pay close to $2.5 billion of the $2.87 billion requested to help cover companies’ losses due to their substantially higher claims burden.

While plenty of small insurance companies have already folded as a result, United Healthcare is the first large company to publicly contemplate exiting the Exchange. In contrast, other large insurance companies, like Aetna, have stated that their health plans have performed as expected.

Rubio’s policy rider is up for renewal in the year-end budget that must be passed by December 11 to avoid a government shutdown. Republicans have stated their intent to see the rider renewed or the risk corridor program repealed entirely.