United Health Might Bail on Obamacare

They seem to be losing large sums of money on the exchanges so they might pull out of them by 2017.

“We cannot sustain these losses,” Chief Executive Officer Stephen Hemsley told analysts on a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”

UnitedHealth said it expects as much as $500 million in losses on the Obamacare plans in 2016. The insurer will record $275 million of the costs in the fourth quarter.

The company’s shares fell 5.8 percent to $110.47 at 12:51 p.m. in New York. Anthem Inc. and Aetna Inc., the two biggest health insurers after UnitedHealth, also declined, as did hospital stocks including HCA Holdings Inc. and Community Health Systems Inc.

If other insurers pull out Obamacare will fall apart only 3 years into the program. I'm sure the White House will try to shame UNH into losing money but unlike the federal government they have a fiduciary responsibility to shareholders. It seems that one of the main complaints about Obamacare is coming to pass as well.

Customers the company has added have tended to use more medical care. UnitedHealth also said today that some people are signing up for coverage, getting care and then dropping their policies.

I think UNH needs to take a page out of the mutual fund industry. Create a stiff fee for pulling out of the plan early. But knowing how terribly written Obamacare was I bet they aren't able to do this so they will lose money until they finally stop selling on the exchanges.