UnitedHealth Group Inc. said its projected losses on the Affordable Care Act exchanges for 2016 deepened as enrollment grew despite the company’s efforts to reduce sign-ups.
The biggest U.S. health insurer said it is expecting losses of more than $500 million on its 2016 ACA plans, compared with previous projections that amounted to $400 million to $425 million in losses.
UnitedHealth had taken steps to pull back on its exchange business in anticipation of losses, including reducing marketing and slashing commissions to health-insurance agents.
The Obama administration’s top health insurance official told Congress Thursday he wants to “loosen up capital rules” to allow private investors to become part owners of the dozen surviving ObamaCare co-ops.
Andy Slavitt, the acting administrator for the Centers for Medicare and Medicaid Services which oversees the ObamaCare co-ops, told the Senate Finance Committee that his agency would also look approvingly on co-op mergers with existing insurance companies.
The new private investment policy represents a major reversal for the Obama administration, which has previously hailed the non-profit co-op health insurance model as a tool for providing competition to private, for-profit insurers.
However, 83 percent of ObamaCare enrollees pay far less than $408 because they get tax credits under the healthcare law. The average tax credit for 2016 is $294, meaning that the average share of the premiums that enrollees have to pay is $113. That is up $8 from the $105 people paid on average last year.
Enrollment through the ObamaCare exchanges has been more sluggish than initially expected, with just about 12 million sign-ups likely this year. That’s better than the 10 million or so officials projected back in October, but far less than the 21 million the Congressional Budget Office estimated as the law was taking shape.
Part of the problem seems to be that people are finding ways to game the system by signing up outside of the limited annual enrollment period and then dropping insurance shortly after. The law has a number of exemptions that allow people to buy coverage at any time throughout the year, such as changing or losing a job, having a child, moving, and getting married.
The people who come in via those special enrollment exemptions, it turns out, are far more expensive to cover. In an earnings call last November, an executive with UnitedHealth, the nation’s largest insurer, said that people buying in outside of the standard enrollment period cost about 20% more.
House Republican committee chairmen on Wednesday subpoenaed Treasury Secretary Jack Lew for documents related to ObamaCare payments that Republicans say are unlawful.
House Energy and Commerce Chairman Fred Upton (R-Mich.) and House Ways and Means Committee Chairman Kevin Brady (R-Texas) issued the subpoena for Lew and three Internal Revenue Service officials to produce documents related to financial help for people under ObamaCare known as “cost sharing reductions.”
The lawmakers are issuing the subpoena after repeatedly requesting the information throughout 2015 but being rebuffed by the administration.
A Senate Committee on Homeland Security and Governmental Affairs chairman wants the federal government to disclose how much money taxpayers lost because of the rapid-fire financial collapse of 12 Obamacare health insurance co-ops, The Daily Caller News Foundation has learned.
Sen. Ron Johnson demanded in a Jan. 19 letter to the Centers for Medicare and Medicaid Services (CMS) that federal officials provide full accounting for the losses. A part of the Department of Health and Human Services, CMS oversees the experimental co-op program.
In November, UnitedHealth abruptly reversed its previously sunny take on ObamaCare and said that the company would have to pull out of the government-run exchanges if market conditions didn’t improve.
UnitedHealth’s bombshell raised the specter, once thought safely in the grave, of the “adverse selection death spiral,” the phenomenon where sick people are more likely to buy insurance, which raises the average expenditure, which means higher premiums, which makes insurance a worse deal for the healthiest members of your insurance pool, which means they drop out, which means your pool is even sicker and average expenditure goes up even more … and there goes the insurance market.
The ObamaCare “risk adjustment” program was designed to support health plans with lots of sick, expensive customers by giving them money from plans with healthier customers. The goal is to help keep insurance markets stable by sharing the “risk” of sicker people and removing any incentive for plans to avoid individuals who need more medical care. Such stability is likely to encourage competition and keep overall prices lower for consumers, while its absence can undermine both and limit coverage choices—the basic principles of the law.
Yet the way the Obama administration has carried out this strategy shows another unexpected consequence of the 2010 health care law. Critics say the risk adjustment program is having a reverse Robin Hood effect—taking money from some plans that are small, innovative or fast-growing, while handing windfalls to some of the industry’s most entrenched players.
In a survey of non-seniors, a New York Times/Kaiser poll found about one-in-five people struggle with medical bills even though they have insurance. Among insured people who reported crushing medical debts, about three-quarters reported putting off vacations, major purchases and cutting back on household spending.
Nearly two-thirds used up all or most of their savings. Far fewer had to resort to second jobs, take on more hours or ask family members for funds (42% to 37%).
Humana will lose money on its 2016 individual market health plans, and the health insurer expects up to 300,000 will drop their coverage by the end of this year, according to a Securities and Exchange Commission filing released late Friday.
It marks the second investor-owned insurer to publicly disclose the problems it is having with the Affordable Care Act’s insurance markets. UnitedHealth Group has lost millions on the marketplace and said it may exit the exchanges by 2017 if things don’t turn around.