UnitedHealthcare, and Humana, three of the largest insurers in the nation are having trouble on the Obamacare exchange. If they can’t make it, how can other insurers make it? This is the uncertainty surrounding Obama’s health reform law just a few months before the open enrollment begins for upcoming 2017.
This follows UnitedHealthcare (HNH) which is downsizing to only 3 states where it will be operating in during 2017. Humana (HUM) is dropping out of almost 1,200 counties in 8 states.
Three years after Obamacare exchange opened and it is suffering. Many who signed up for coverage were a lot sicker than expect which has been costly for insurers. In addition, many of the healthier Americans have opted to pay a penalty instead of the premium. This is causing many of the insurers to raise rates by nearly double digit percentages for upcoming 2017 and or minimize their presence in the exchange market.
The insures actions taken covers up the fact that for many people Obamacare is working and has become a crucial part of healthcare in the US. Covered by Obamacare plans are more that 11 million American citizens, 85% of these people are receiving some type of federal subsidies dulling the impact of premium hikes which sent the rate down for uninsured rates to 9.1%, a record low.
Some insurers who entered the individual market after a focus of providing low income Americans Medicaid benefits are turning profits. Experts say this upset in the market was not unexpected and it’s critical to both the insurers and government to steps and actions to help stabilize this program yet Obamacare is said to not be hopeless.
As a new market it’s unstable even if the fundamentals are sound. Many insurers are losing a lot of money with Obamacare as costs surpass incomes by 5% in 2014 only to double the following year as stated by McKinsey’s Center for U.S. Health System Reform, and losses are predicted to grow in the following year. In 2014 only 30% of the insurers had profitable individual divisions slipping to about 25% last year. The more restrictive plans and policies did better on the exchange with a more limited network of hospitals, doctors, and manage health care more closely for their enrollees.