Mar­kets await Unit­edHealth’s fi­nal 2015 ex­change num­bers

Modern Healthcare - - THE WEEK AHEAD - —Bob Her­man

As Unit­edHealth Group toys with the idea of aban­don­ing the Af­ford­able Care Act’s in­sur­ance ex­changes, in­vestors and other stake­hold­ers are wait­ing to learn the full ex­tent of the dam­age to the ex­changes.

Unit­edHealth, the na­tion’s largest health in­surer, will re­port fourthquar­ter and full-year 2015 fi­nan­cials Tues­day, kick­ing off the earn­ings sea­son for a health­care in­dus­try that was bruised in the last weeks of the year.

The Min­netonka, Minn.-based health­care con­glom­er­ate es­ti­mated in Novem­ber that losses from mar­ket­place plans would to­tal $425 mil­lion in its 2015 re­port­ing pe­riod. The loss in­cluded a pre­mium de­fi­ciency re­serve of $275 mil­lion that’s ex­pected on its 2016 ACA poli­cies.

The CMS has re­ported growth in the ex­changes—11.3 mil­lion peo­ple had signed up on the state and fed­eral mar­ket­places as of Dec. 26, above the Obama ad­min­is­tra­tion’s mod­est goal of 10 mil­lion for 2016. But many an­a­lysts and ob­servers don’t be­lieve the ex­changes’ risk pools have im­proved enough to sat­isfy in­sur­ers.

“Dys­func­tion in pub­lic ex­changes will con­tinue to re­duce earn­ings, cre­ate volatil­ity and serve as a gen­eral dis­trac­tion for the com­pa­nies and in­vestors,” Bar­clays Cap­i­tal an­a­lyst Josh Raskin wrote in a re­search note.

The CMS may al­le­vi­ate one mar­ket­place con­cern of Unit­edHealth and other in­sur­ers by chang­ing the rules around spe­cial-en­roll­ment pe­ri­ods. In­sur­ers have ar­gued that a large por­tion of their losses have come from high utiliz­ers who en­roll in cov­er­age out­side of open en­roll­ment but can’t prove they qual­ify for hard­ship ex­emp­tions. Unit­edHealth and oth­ers have cut com­mis­sions to bro­kers who sell plans out­side of open en­roll­ment.

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