Washington (AFP) - US officials rushed to defend President Barack Obama's signature health care reforms Friday after the country's largest insurer said it might pull out due to large financial losses.
UnitedHealth Group on Thursday said it expects to lose up to $500 million next year from its participation in exchanges providing insurance under the Affordable Care Act, known as Obamacare.
UnitedHealth chief executive Stephen Hemsley said market data points "to an environment that is declining and likely to continue in that direction into next year."
If so, he said, the company could give up on the ACA market by 2017.
"We cannot sustain these losses. We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself," Hemsley said.
That, many worry, could represent the tip of the iceberg for an industry still waiting to see if Obamacare, which aims to extend health care coverage to millions more Americans at cheaper rates, works as planned.
To do so, however, the ACA needs stiff competition among insurers to provide a good choice of coverage plans, which won't happen if they lose money on it.
But Obama administration officials argued that other insurers are happy in the market.
UnitedHealth's statement "is not indicative of the marketplace's strength and viability," said Ben Wakana, a spokesman for the Department of Health and Human Services.
"This year, people looking for coverage in the marketplace continue to have a robust number of plan choices and as the data shows the marketplace is stable, vibrant and a growing source of coverage for new consumers."
An administration source pointed out that UnitedHealth was only in its first year in the ACA insurance marketplace and that the 550,000 customers it had signed up represented only about six percent of all participants in the program.
The source also said that the number of companies offering ACA insurance for 2016 had grown to an average of 10 per state, up from eight in 2014.
- Participants rising to 10 million -
"Enrollment has grown year over year. Issuers have grown year over year," he said, predicting the number of paying participants to rise to 10 million this year from 9.1 million last year.
After their shares took hits Thursday from the UnitedHealth comments, other major insurers in the ACA marketplaces reported that they were generally satisfied with the business.
In a securities filing, Centene Corp. said its ACA business "continues to perform in line with expectations."
According to UBS analysts, Aetna said that while it is marking up small losses this year on ACA policies, it expects margins and policies to rise next year. And Molina Healthcare told UBS that "we are doing fine."
Even so, UnitedHealth's Hemsley pointed to a challenge to the Obamacare program going ahead.
To make it work, insurers need as many young,healthy enrollees -- those less likely to use health services -- as older enrollees who will need much more frequent healthcare.
If there are not enough of the former, the insurers will find it harder to make money.
In recent weeks, he said, the company has seen "higher levels of individuals coming in and out of the exchange system to use medical services (and) lower expectations for new growth in overall future participation."
Making sure people insured under the ACA re-enroll in the policies each year is proving as much a challenge as attracting new enrollees, say analysts.
Re-enrollees are challenged by rising prices and insurance companies that drop their plans at the end of a year and force them to choose another from an often complex and confusing list.
Analysts said in a Brookings Institution report that these issues "pose a real threat to retention" in ACA insurance programs.
"Supporters of the ACA will have to work hard... if the ACA is to fulfill the Obama administration's promise of near universal health insurance coverage," the report said.