UnitedHealth chopped its 2015 earnings forecast and the nation's largest health insurer has begun to question its future in public insurance exchanges, a key component in the nation's health care overhaul.
The company said Thursday that it would pull back on the marketing of its exchange business a few weeks after open enrollment for that coverage began nationwide. It also said that it will decide in the first half of next year "to what extent it can continue to serve the public exchange markets in 2017."
"We cannot sustain these losses," CEO Stephen Hemsley said Thursday. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."
Hemsley told investors Thursday that the company doesn't intend to take further losses from this business in 2017.
State-based health insurance exchanges opened a few years ago as a way for customers to buy individual health insurance, many with help from income-based tax credits.
The exchanges offered a potential growth boom for insurers but also risk because UnitedHealth and others had little sense of the health needs of new customers. They also didn't know whether the new business would attract enough healthy customers to balance the expected enrollment of sicker customers who had not been able to find coverage before.
UnitedHealth's unexpected announcement Thursday is sure to raise more concerns about the sustainability of the overhaul's public insurance exchanges.
With less than a year before the U.S. presidential election, Goldman Sachs analyst Matthew Borsch wrote that the health of the exchanges "may ultimately have significant policy and political implications."