Top insurer UnitedHealth Group said Tuesday its 2017 earnings will benefit as it mostly exits the ObamaCare exchanges, its worst-performing business line.
UnitedHealth reported second-quarter earnings of $1.96 per share, up 13% from a year earlier, handily beating analysts’ estimates of $1.89. Still, the company just slightly raised its full-year earnings outlook to $7.80-$7.95 a share from $7.75-$7.95, roughly in line with consensus estimates for $7.89.
The high end of its full-year 2016 earnings guidance held steady because worse-than-expected results in its ObamaCare individual market business called for a conservative outlook, management said in an earnings call.
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In 2013, one Affordable Care Act component taking effect — a medical device excise tax — imposed a new financial burden on American Laboratory Products Co.
The 2.3 percent tax on revenue took a bite out of the company’s bottom line, “no question about it,” said Sean Conley, president of the family-owned-and-operated Alpco. “This obviously has an impact on where our funds go and makes it a bit more challenging to continue to create new jobs.”
The controversial medical device tax was a focus of conversation Friday when U.S. Sen. Kelly Ayotte visited the company for a discussion and tour.
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Oregon’s nonprofit ObamaCare health insurance co-op is winding down operations due to financial problems, the second such announcement this week for the troubled co-op program.
The announcement is just the latest in a long string of failures of ObamaCare’s co-ops, non-profit health insurers set up to increase competition with established insurers. Before this week, just 10 of the original 23 co-ops remained functioning, and Republicans have seized on the problems.
Oregon’s Department of Consumer and Business Services announced Friday that it is taking over the insurer, known as Oregon’s Health CO-OP, and will liquidate the company.
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Last week, the Department of Health and Human Services (HHS) released the payment amounts that some insurers owe and some insurers will receive through the Affordable Care Act (ACA) risk adjustment program. As the law’s implementation moves forward, it is increasingly clear that the controversial risk adjustment program presents a fundamental trap, a sort of “damned if you do, damned if you don’t” scenario. To the degree that risk adjustment works, insurers individually lack the incentive to enroll the young and healthy people needed for the ACA’s complicated structure to survive. To the degree that risk adjustment doesn’t work, large arbitrary transfers between insurers occur that produce significant uncertainty in the market.
The risk adjustment program is budget neutral—within each state insurers with healthier enrollees pay the aggregate amount that insurers with less healthy enrollees receive—and is intended to make insurers more-or-less indifferent to the health status of their enrollees. The Obama administration appears to recognize the importance of risk adjustment for the ACA’s future as HHS recently convened a day-long conference and released a 130-page paper on the subject. This conference was partially motivated by the strong complaints, particularly by newer and smaller insurers, that the program unfairly benefits large, established insurers.
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Insurers helped cheerlead the creation of Obamacare, with plenty of encouragement – and pressure – from Democrats and the Obama administration. As long as the Affordable Care Act included an individual mandate that forced Americans to buy its product, insurers offered political cover for the government takeover of the individual-plan marketplaces. With the prospect of tens of millions of new customers forced into the market for comprehensive health-insurance plans, whether they needed that coverage or not, underwriters saw potential for a massive windfall of profits.
Six years later, those dreams have failed to materialize. Now some insurers want taxpayers to provide them the profits to which they feel entitled — not through superior products and services, but through lawsuits.
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The health care law President Obama signed six years ago was supposed to fix the individual insurance market with enlightened rules and regulations. Instead, ObamaCare is destroying this market. Just look at what’s happening to Blue Cross Blue Shield.
If any insurer could cope with ObamaCare, it should have been Blue Cross Blue Shield.
Blue Cross companies came into the ObamaCare exchanges with decades of experience writing individual policies. Most of them are non-profits, which gives them an automatic leg up on the competition. And their plans captured the largest share of the exchange markets across the country.
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The Affordable Care Act (ACA) placed numerous requirements on insurance offered in both the individual and small group markets. This study presents data from the 174 insurers that offered qualified health plans (QHPs)—plans that satisfy the ACA requirements and are certified to be sold on exchanges—in both the individual and small group markets in 2014. QHPs in both markets are essentially the same and are governed by nearly identical regulations, making possible a better-controlled analysis of the performance of insurers participating in the two markets. Average medical claims for individual QHP enrollees were 24 percent higher than average medical claims for group QHP enrollees. Moreover, average medical claims for individual QHP enrollees were 93 percent higher than average medical claims for individual non-QHP enrollees. As a result, insurers made large losses on individual QHPs despite receiving premium income that was 45 percent higher for individual QHP enrollees than for individual non-QHP enrollees. These higher medical claims resulted in loss ratios for individual QHPs nearly 30 percentage points higher than loss ratios in other markets. Given that insurer performance selling individual QHPs worsened in 2015, these findings suggest that the ACA rules and regulations governing QHPs may be incompatible with a well-functioning insurance market even with subsidies to insurers and incentives for individuals to enroll in QHPs.
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Rather than stabilizing in 2016 as many experts predicted, the Affordable Care Act (ACA) is leading to large premium hikes and less choice and competition in the individual insurance market as plans prove unattractive to relatively young, healthy, and middle-class people. In order to achieve a better understanding of the ACA’s impact, a new Mercatus Center working paper compared insurers’ performance selling individual Qualified Health Plans (QHPs) with three other markets: the individual non-QHP market, the small group QHP market, and the small group non-QHP market.
My co-authors, Doug Badger of the Galen Institute, Ed Haislmaier of the Heritage Foundation, Seth Chandler of the University of Houston, and I make two key empirical findings. First, individual market QHP enrollees had average medical claims nearly double the average claims for individual non-QHP market enrollees in 2014. Second, individual market QHP enrollees were about 25% more expensive than enrollees in small group QHPs.
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Today, after years of hearings and speeches and debates, the Paul Ryan-led House of Representatives has done something it has not done before: it has released a comprehensive, 37-page proposal to reform nearly every federal health care program, including Medicare, Medicaid, and Obamacare. No proposal is perfect—and we’ll get to the Ryan plan’s imperfections—but, all in all, we would have a far better health care system with the Ryan plan than we do today.
The first thing to know about the Ryan-led plan — part of a group of proposals called “A Better Way” — is that it’s not a bill written in legislative language. Nor is it a plan that has been endorsed by every House Republican.
Instead, it’s a 37-page white paper which describes, in a fair amount of detail, a kind of “conversation starter” that House GOP leadership hopes to have with its rank-and-file members, and with the public, in order to consolidate support around a more market-based approach to health reform.
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House Speaker Paul Ryan’s policy plan for health care, as expected, leans heavily on market forces, more so than the current system created by Obamacare. The proposal contains a host of previously proposed Republican ideas on health care, many of which are designed to drive people to private insurance markets.
Importantly for conservatives, as part of a full repeal of the Affordable Care Act, the current law’s mandates for individuals and insurers would disappear under the GOP plan. It would overhaul Medicare by transitioning to a premium support system under which beneficiaries would receive a set amount to pay for coverage. The plan also would alter Medicaid by implementing either per capita caps or block grants, based on a state’s preference.
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