Tornado Alley (PROG)

[3Saints]

It's going so well that UnitedHealthcare just said screw the ACA....

http://on.wsj.com/1U4v8f8

UnitedHealth Tops Expectations, to Leave Some Affordable Care Act Markets

U.S. health insurer will pare its presence from 34 states this year to “only a handful” in 2017

By
Anna Wilde Mathews

Updated April 19, 2016 11:48 a.m. ET

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UnitedHealth Group Inc. said it would remain in only a very small number of the Affordable Care Act’s marketplaces next year and suggested that it doesn’t currently see a way to run the business effectively.

The biggest U.S. insurer will pare its presence from 34 states this year to “only a handful” in 2017, said Chief Executive Stephen J. Hemsley during the company’s first-quarter earnings conference call. Mr. Hemsley said that the “smaller overall market size and shorter-term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis.”

UnitedHealth said it also steepened its projected loss on the 2016 exchange business to $650 million from around $525 million, amid signs that new enrollees’ health status appeared worse. The company booked a large chunk of that loss last year.

The announcement follows on UnitedHealth’s earlier signals that it was reconsidering its presence in the ACA exchanges. So far, regulators in five states have disclosed that UnitedHealth will withdraw from their states’ health-law marketplaces.

The potential departure of UnitedHealth would reduce the number of options for some consumers, particularly in certain rural and southern regions of United States. In some cases, according to a new analysis by the Kaiser Family Foundation, marketplace consumers now may have only one insurer option, unless more companies enter.

Government officials have said they expect insurers to enter and leave state marketplaces, and that they remain confident in the system.

The exchange business reflects a small share of UnitedHealth’s overall portfolio, and the company reported better-than-expected earnings for the first quarter and raised its guidance for the year, fueled by strong results from its Optum health-services arm and growing government business. The company’s shares were up 1.81% to $130.12 midday.

Overall, UnitedHealth reported a profit of $1.61 billion, or $1.67 a share, up from $1.41 billion, or $1.46, a year earlier. Excluding certain items, adjusted earnings rose to $1.81 a share from $1.55. Revenue climbed 25% to $44.53 billion. Analysts had projected earnings of $1.72 a share on revenue of $43.96 billion.

The Minnetonka, Minn., company now expects adjusted earnings for the year of about $7.75 to $7.95 a share on revenue of $182 billion, compared with its previous guidance of $7.60 to $7.80 a share and at least $180 billion in revenue. UnitedHealth said the increase in earnings is due to changes in the expected income-tax rate and intangible amortization.

Since last year’s first quarter, UnitedHealth added about 2 million insurance members, bringing its tally to roughly 43.6 million in the U.S., with strong increases in its Medicare and Medicaid enrollment.

UnitedHealth said its medical-loss ratio, a closely watched metric that reflects the share of premiums spent on medical care, increased 30 basis points year-over-year to 81.7%, reflecting the extra calendar day of service in the quarter. The company added that medical cost trends were well-controlled in the first quarter and consistent with management expectations.

UnitedHealth said that despite efforts late last year to dial back its marketing of ACA exchange plans after the losses became clear, its exchange enrollment grew by roughly 300,000 to about 795,000 at the end of the first quarter—growth it had expected, because it was offering plans in a larger number of states than the previous year. The company said it expects the enrollment to drop to around 650,000 by late this year.

At least five state regulators have said UnitedHealth’s main insurance arm will stop offering ACA exchange plans in their states next year. Most recently, insurance regulators in Oklahoma and Louisiana said they had been informed the company would withdraw in 2017, added to earlier disclosures by Michigan, Georgia and Arkansas.

A few states have also disclosed that UnitedHealth will remain in their exchanges next year—so far, this includes Nevada and Virginia.